Answered: Suppose that the market for soft drinks…

Suppose that the market for soft drinks is given by Deamand P= 187-2.8Q Supply P= 0.9Q The government wants to discourage unhealthy eating habits and so imposes a tax that reduces the market

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Costs Of Taxation

Section: Chapter Questions

Problem 3CQQ

See similar textbooks

Related questions

Q: Let's say the Federal Reserve lowers the federal fund rate that is her aim. i. Describe the open…

A: Introduction Federal Reserve: This phrase alludes to the framework through which the federal reserve…

Q: John has got a Billie Eilish concert ticket for $600. However, when he arrived at the concert venue,…

A: The price consumer pays for good based on the maximum willingness of consumer to pay for good.

Q: QUESTION 21 BHDEN +0 28 24 20 16 12 8 4 P S D1 D2 0 4 8 12 16 20 24 Q 21. Assuming demand changed…

A: Income elasticity of demand refers to the sensitivity of the quantity demand of a good with respect…

Q: e indifference curve (exchange) risk-return with draw two characteristics of the maximum of minimum…

A: *Answer: Economic planning can be defined as the process where the central government makes the…

Q: 6 To find the Marshallian quantities demanded given that the utility function is: x subscript 1…

A: Utility functions shows the relationship between utility and consumption of commodities.

Q: A country has $100 million of net exports and $170 million of saving. Net capital outflow is O A.…

A: In a open economy, at the equilibrium leakages are always equal to injections. Leakages are the…

Q: money. How does the quantity theory of money relate to Milton Friedman’s famous statement that…

A: In classical school of economics money is demanded only for transaction purpose. Inflation is the…

Q: Two countries, Sahara and Arctica, conduct consumer surveys. In Sahara, consumers buy 69 units of…

A: Africa Sahara Product Quantity Current Price Base Price Product Quantity Current Price Base…

Q: What are the difference of the modern theory of international trade vs classical theory

A: The modern theory holds that trade between two countries occurs only when their factor endowments…

Q: Your current prices are $311 in the southwestern region, $278 in the western region, and $240 in the…

Q: Monopolistic Competition. Please explain detail with the diagram

A: Monopolistic competition is a market structure which have combines elements of both monopoly and…

Q: How can countries control Monopoly power using public policy or law?

A: A market arrangement known as a monopoly has a single seller controlling the whole market. The…

Q: Law borrowed $2000 from Bence at 8% per annum. After 6 year he cleared the amount by giving $2600…

A: Following is the given information: Borrowed amount = $2000 Interest rate = 8% Time = 6 years

Q: Which of the following claims about traditional and ecological economics does not demonstrate a…

A: Given that it pertains to every field, economics is regarded as a subject that is pervasive.…

Q: 7.Which flows represent taxes? a. C and D b. E and F c. A and B d. D and E

A: Introduction In the modern economy, money is used in the process of exchange. In the monetary…

Q: Use information from paragraph 4 to answer the following question. Before the Progressive Era, many…

A: When talking about progressive tax, it can be said that it is the tax that is directly related to…

Q: Assume the Bobo is the domestic currency. A Big Mac costs $6 in Canada. If the exchange rate is 10…

A: the exchange rate is the cost of a country's cash with regard to another money.

Q: Show the possible effect of this free entry and exit by shifting the demand curve for a typical…

A: Solution:- 1st Part) ▪︎Firm's are not price takers- True Explanation- If there is perfect…

Q: Prices and wages help coordinate economic activities. Why?

A: Economic activity is the process by which people purchase or sell goods and services to meet their…

Q: Why could the Great Depression not be contained within the United States?

A: Please find the answer below. GREAT DEPRESSION: The Great Depression, which began in the United…

Q: United States status with the Lewis Kingdom Renew MFN status with the Lewis Kingdom U.S. trade value…

A: When UK plays the strategy "impose trade restrictions on US" then US have the following strategies…

Q: There are two people. Each person's demand for a public good is P = 20 - Q. The marginal cost of…

A: Public good is a common good which is enjoyed by all people in the society but by using the public…

Q: Currently, you get 2.2 Canadian dollars for each Wakandan dollar. In Canada, you can buy a Big Mac…

A: Purchasing Power Parity is the equilibrium between two currencies of two countries that is brought…

Q: Consider the AD-AS model discussed during the lectures. Assume that the aggregate demand curve is…

A: Fiscal Policy is defined as a policy which emphasizes on the use of government spending or implement…

Q: Compared with a competitive firm, a single-price monopoly's profit maximizing output is Select…

A: "A perfectly competitive firm is a seller who maximizes profits at a point where price equates the…

Q: 1) Sharon spends her time (20h) between leisure (L) and work and he consume Y product from his…

A: Given information Total time=20 hrs L--- Leisure time H---- Hours of work Utility function U=LY+2L

Q: Run (-25,-4) Drive Player 2 Walk Run Fly Walk Swim (10,0) (3,20) (2,10) (1,9) a. Use backward…

A: Here we will find the subgame perfect equilibrium using the backward induction approach:…

Q: Suppose you’re relatively new in business and want to launch your product in the market. You have a…

A: Pricing strategy primarily considers the current market price of goods or services. Pricing strategy…

Q: QUESTION 26 44 40 36 a firm in a perfectly competitive market MC ATC

A: The term perfect competition alludes to a theoretical market structure. There is no monopoly in a…

Q: 3. Law borrowed $2000 from Rence at 8% per annum. After 6 year he cleared the amount by giving $2600…

A: Here, given information is, Law borrows (P): $2000 Interest rate (r): 8% per annum Time period (n):…

Q: In a two-step model with R= 1.1, one state price is A(2, 2) = 0.14. What is state price A(2, 0)?

A: The two-section model depends on a factual decay of the thickness of the result into an interaction…

Q: Suppose an economy consists of three goods, pizzas, movies, and lattes. The goods have the…

A: Three goods: Pizzas, movies, and lattes Three years: 2019, 2020, 2021 Prices per unit and…

Q: A bank charges 11% discount on short term loan& Find the sum received by the borrower who requests…

A: Given Discount rate =11% Loan amount =Php 1500 Starting date is October 3, 2011, and the maturity…

Q: Refer to Exhibit 5.4, which shows the aggregate demand and supply curves for the United States. A…

A: In the event that either the aggregate supply or aggregate demand curve shifts in the aggregate…

Q: 10. Lawrence has just won $6,250 from the 50/50 at the Sea Dog's game and decides to invest all of…

A: Given that, Principal = $6250 Interest = 6.5% Interest = $1480 (Compounded or Simple Interest) Time…

Q: In the open-economy macroeconomic model, if a country's supply of loanable funds shifts right, then…

A: An open economy is a form of economy in which organisations from other nations trade goods in…

Q: Graphically illustrate the indifference curve with cloth and beach balls as two goods. Explain the…

A: Indifference curve is a curve that shows combination of two goods that give equal satisfaction to…

Q: Illustrate the Steady-State of the Solow-Swan model and show the effect of an increase in the…

A: Steady state is reached where the per capita variables such as output per worker, consumption per…

Q: If the price of tamarind falls, there will be: an increase in the quantity demanded of tamarind. a…

A: The equilibrium price is the only cost where the aims of consumers and the aims of producers…

Q: Please define the factors affecting the duration of planning period of the economic institute

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: 2. Introduction to the foreign-currency In an open economy, why is the demand curve for dollars in…

A: An open economy is an economy where economic activities occur among the domestic and outside…

Q: part-e: What is the Fisher equation? What relationship does it represent?

A: Introduction In the theory of demand for money, Fisher and other classical economist laid stress on…

Q: Banks do not take steps to increase security since they believe it is less costly to allow some bank…

A: The financial incentive that motivates someone to take action increases both their benefit and the…

Q: A positive monotonic transformation of a utility function preserves a. diminishing marginal…

A: A monotonic transformation of a utility function is a transformation in which. the ranking of the…

Q: Under one form of government price regulation, the government sets the price at a level (which is…

Q: If Boblandia had a flexible exchange rate, it would cost 5 Bobos to purchase a Canadian dollar. The…

A: If exchange rate is higher than that in equilibrium(flexible exchange rate), supply of the domestic…

Q: Illustrate and discuss how a change in the price of a commodity can generate income and…

A: Substitution effect:- The substitution effect is the decline in a product's sales which results from…

Q: Select all events that contribute to increase the current year's GDP in Canada? 0 The government…

A: The worth of conclusive domestic labour and products in a given year is estimated by Gross Domestic…

Q: 1) Sharon spends her time (20h) between leisure (L) and work and he consume Y product from his…

A: Given information Total time=20 hrs L--- Leisure time H---- Hours of work Utility function U=LY+2L

Q: part-g: What is the discount rate? part-h: What is the federal funds rate? part-i: What…

A: Note:- Since we can only answer one question at a time, we'll answer the first one. Please repost…

Question

Suppose that the market for soft drinks is
given by Deamand P= 187-2.8Q Supply
P= 0.9Q The government wants to
discourage unhealthy eating habits and
so imposes a tax that reduces the market
equilibrium by 8. How much of the tax
revenue generated was previously
captured by producers at equilibrium?
a. $179 b. 306.39 c. 43.20 d. 115.20

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Using a hypothetical demand and supply equations explain what would happen ifgovernment imposes an indirect tax (assume a value) on the product. Find the newequilibrium, change in consumer and producer surplus and amount of governmentrevenue and DWL. Under what conditions consumers will bear of the tax burden? Underwhat conditions producers will bear of the tax burden?
Some finance experts advise consumers not to worry aboutrising gasoline prices, the cost of which can easily be coveredby forgoing one takeout meal a month, but to worry abouthow high energy prices will affect the rest of the economy. Forexample, each dollar-a-barrel price increase is equivalent toa $20 million-a-day “tax” on the economy. Explain what thismeans.4. Capital M
Suppose the demand for cigarettes is Q = 15 - 0.5Pand the supply of cigarettes is Q = P - 3, where P is the price per pack of cigarettes. Suppose the government imposes a cigarette tax of $3 per pack. (a) What is the price paid by producers and price faced by consumers? (b) What is the government revenue from the tax and What is the total dollar amount of tax revenue that is ultimately paid by consumers (i.e. consumers' tax burden)? (c) What is the excess burden of the tax?
The market demand for steel is QD = 240–6P and the market supply for steel is QS= –60 +4P. Government imposes a $10 tax per unit of steel bought by the consumer. a) Who bears the economic incidence of this tax?b) Why does one side take more burden of tax than the other side?c) Calculate the deadweight loss of a $10 tax per unit levied on consumers of steel.
Consider a product that is fixed on supply QS=4 and the demand for the product is givenby QD= 10-2P. The government imposes a unit tax of 2 TL per kg on the consumer.a) What is the price paid by consumer and producers before the tax and after the tax?b) Find the total tax burden, burden on consumers and burden on producers.c) Suppose that supply schedule is changed to QS= 4+P. Redo the above questions and compare the results thanks in advance
Let Q=2P be supply and Q=20-2P be demand. With a tax of 2 the price received by the producer is........ With this question, I know the price received by tge consumer is 6 becuase I just plug the new equilibrium quantity into the demand equation. I reworked all the problems so that P(supply)=1/2Q and P(demand)=10-1/2Q and P(tax)=1/2Q+2. My only question is do I plug the new equilibirum quantity into the supply equaiton with or wihtout the tax? (P=1/2Q or P=1/2Q+2)? I might just be overthinking it, but I just want to double check becuase so I can get a solid understanding of this.
The market demand for rose is QD = 2400–60P and the market supply for rose is QS= –600 +40P. Government imposes a $5 tax per unit of rose sold by the producer.a) Who bears the economic incidence of this tax?b) Why does one side take more burden of tax than the other side?
Which of the following statement is true about tax? A. The burden shared by consumers and producers doesn’t change regardless of which party the tax is imposed onB. Market functions less efficiently, while not all suffer from a lossC. Both supply and demand curve have something to do with tax incidenceD. all of the above
ANSWER E 2. The function of supply and demand for an item P = 14 - 2Q and P = 5 + 2Q. When againstthe goods are subject to tax of t = 2 per unit, then calculate:A. The point of market equilibrium after tax.b. Tax burden borne by consumers and producers.c. And if the item is given a subsidy of s = 1, determine itnew market balance.d. What is the amount of subsidies issued by the government.e. Draw the curve.
Suppose the demand curve for pizza can be represented by the equation QD = 20 - 2P. The supply curve for pizza can be represented by the equation QS = P - 1. Calculate and show the effects of a $1.5 tax per pizza. (Hint: ΔP, tax burden, ΔQ, ΔCS, ΔPS, ΔTS, ΔT)
Consider a product that is fixed on supply QS=4 and the demand for the product is given by QD= 10-2P. The government imposes a unit tax of 2 TL per kg on the consumer. a) What is the price paid by consumer and producers before the tax and after the tax? b) Find the total tax burden, burden on consumers and burden on producers. c) Suppose that supply schedule is changed to QS= 4+P. Read the above questions and compare the results.
Suppose the demand for football tickets is QD=360-10P and the market supply is QS=20P. a) What price would firms receive after the tax is imposed & What share of the tax is borne by the consumers? b) What share of the tax is borne by the sellers? & What can you say about relative elasticities of demand and supply based on your answers in tax is borne by the consumers and tax is borne by the sellers? c) Calculate tax revenue collected by the government from this tax.