Suppose that the government imposes a per-unit tax on cell phones. The tax is imposed on producers of cell phones and the amount of the tax is $50 per cell phone. The following graph shows the effect of the tax. Use the graph to answer the following questions. Price (P) (per cell phone) 250 220 New Swith tax Sno tax

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter22: Price Takers And The Competitive Process
Section: Chapter Questions
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Question

What is the equilibrium P* and Q* before the imposition of the tax?

 

QUESTION 2
Suppose that the government imposes a per-unit tax on cell phones. The tax is imposed on
producers of cell phones and the amount of the tax is $50 per cell phone. The following graph
shows the effect of the tax. Use the graph to answer the following questions.
Price (P)
(per cell phone)
250
220
200
1 1.1
New Swith tax
Sno tax
D
Figure 14
Quantity (Q)
(in billions of cell
phones per year)
Transcribed Image Text:QUESTION 2 Suppose that the government imposes a per-unit tax on cell phones. The tax is imposed on producers of cell phones and the amount of the tax is $50 per cell phone. The following graph shows the effect of the tax. Use the graph to answer the following questions. Price (P) (per cell phone) 250 220 200 1 1.1 New Swith tax Sno tax D Figure 14 Quantity (Q) (in billions of cell phones per year)
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Follow-up Question

How much of the tax per cell phone is paid by producers and how much is paid by consumers?

QUESTION 2
Suppose that the government imposes a per-unit tax on cell phones. The tax is imposed on
producers of cell phones and the amount of the tax is $50 per cell phone. The following graph
shows the effect of the tax. Use the graph to answer the following questions.
Price (P)
(per cell phone)
250
220
200
1 1.1
New Swith tax
Sno tax
D
Figure 14
Quantity (Q)
(in billions of cell
phones per year)
Transcribed Image Text:QUESTION 2 Suppose that the government imposes a per-unit tax on cell phones. The tax is imposed on producers of cell phones and the amount of the tax is $50 per cell phone. The following graph shows the effect of the tax. Use the graph to answer the following questions. Price (P) (per cell phone) 250 220 200 1 1.1 New Swith tax Sno tax D Figure 14 Quantity (Q) (in billions of cell phones per year)
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