Suppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.8 and 0.7 respectively. Suppose the government imposes a per-unit tax of $45 Some economists believe that a sales tax, in general, is undesirable. Explain. Despite this, why do most countries still impose a tax on cigarette? Explain plausible arguments.

Q: Give an example of a product that has inelastic demand and elastic supply in the market to price. If…

A: An inelastic demand is defined as one where a change in price does not significantly impact demand…

Q: The vertical distance between points A and C represents a tax in the market. Price P4 Supply P3 B P2…

A: The equilibrium price in a market is determined by the forces of demand and supply. The equilibrium…

Q: Suppose that the demand for insulin is perfectly inelastic with respect to price.  If a tax of $3…

A: The demand for insulin is perfectly elastic, i.e., vertical demand curve.  The tax of $3 per vial of…

Q: The market for soft drinks is perfectly competitive. Assume that the supply of soft drinks is point…

A: Here, it is given that the supply of soft drinks is point elastic and slopes upward, and, demand for…

Q: Fill in the following table with the quantity sold, the price buyers pay, and the price sellers…

A: The equilibrium price and quantity of a good sold in the market are determined by the forces of…

Q: On June 2, 2008, the State of New York imposed a tax of $1.25 per pack of cigarettes. Prior to the…

A: Elasticity of Demand The elasticity of demand is the percentage change in the quantity demanded of a…

Q: Suppose households supply 560 billion hours of labor per year and have a tax elasticity of supply of…

A: The tax elasticity of supply is equal to 0.15.The tax rate increases by 10%.There exists an inverse…

Q: The supply of oil is more elastic than the demand for oil. If oil is taxed $10 per barrel, how will…

A: Elastic supply means when price increases by some percentage, quantity supply increases by more than…

Q: When a good is taxed, the burden of the tax fallsmainly on consumers ifa. the tax is levied on…

A: Tax: A compulsory payment to state revenue levied by the government on worker's income and firm's…

Q: At the current market equilibrium, the price elasticity of supply for a certain good is much lower…

A: Given: Price elasticity of supply is lower than price elasticity of demand . Government imposes a…

Q: Imagine an excise tax levied on the sellers of cigarettes. Assume that the tax is $2.00 per pack.…

A: Since you have posted multiple subpart question so as per answering guideline, only first 3 subpart…

Q: The demand and supply equations for a product are: Q= 300 — 6P and Q.= -40 + 6P. Determine the…

A:

Q: Suppose the price elasticity of demand for luxury boats is zero. Explain, with the use of a diagram,…

A: Price elasticity: It refers to the change in the price of goods and services. The more change in…

Q: The price elasticity of demand for lychee fruit is 1.3, while the price elasticity of supply is 0.7.…

A: Here, price elasticity of demand is given as 1.3 and price elasticity of supply is given as 0.7.…

Q: In the state of Santa Lucia cigarettes were selling for $8.03 per pack before a $0.25 per pack…

A: Price elasticity of demand refers to the percentage change in quantity due to a percentage change in…

Q: Daniel and Jacob like soda drinks. Jacob's demand for soda is: P=10-Q; the demand for Daniel is…

A: Demand and supply forces in the market interact to give the market equilibrium condition. A tax…

Q: Consider the market for junk food. Illustrate and explain the effects on price, quantity and the…

A: The market for junk food is represented in the below steps.

Q: Suppose a $1 tax is imposed on cigarette manufacturers, which of the following will occur? Group of…

A: Tax Incidence:- A tax incidence is a situation whenever the tax burden is shared by market…

Q: The government is considering levying a tax of $60 per unit on suppliers of either concert tickets…

A: Graph: Concert tickets (Deadweight loss = area of triangle ABC as shown, since I can't access your…

Q: What is the impact of government failure on the price elasticities of demand? What is the impact of…

A: The elasticity of demand is the ratio of percentage change in quantity demanded to the percentage…

Q: why do comsumers pay the tax on goods if the elasticity of demand is less than the elasticty of…

A: Demand is said to be inelastic when the change in price leads a change in quantity demanded in…

Q: A government intervenes in a market and as a result the demand curve shifts to the right. Which…

A: The government makes payments to encourage the production of goods and services that it sees as…

Q: If the government places a tax of $500 on luxury cars, what happens in the market? Please assume…

A: Demand refers to the quantity that a consumer wishes to purchase at a given price in a given period…

Q: The demand and the supply for a good are each neither perfectly elastic nor perfectly inelastic. If…

A: A tax is a financial charge being levied by any government upon an individual or an organization for…

Q: (a) Is the price elasticity of supply less than one, equal to one, or greater than one? Explain.

A: a. The price elasticity of supply is the calculation of the change of the amount being supplied with…

Q: The government imposes a $2.50 per-unit tax on the consumption of good X. As a result the A) supply…

A: A tax on consumption will affect the consumers initially though the share of the tax burden will…

Q: B. $2.00 C. $2.20 D. $2.60 E. $1.80

A: The equilibrium in the market is where the demand and supply curve intersect. When the tax is…

Q: the demand for a product is inelastic but the supply is elastic, the ________ will bear the tax…

A: The burden of tax on consumers and producers is decided by the elasticity of demand and supply. The…

Q: Question 10 Price Supply P3 P2 F G P1 Demand Quantity 01 Q2 Refer to the graph above. Suppose the…

A: When government imposes a tax, it generally lead to arise deadweight loss and the yas burden is bear…

Q: The reason which determines the elasticity of tax burden on buyers and sellers.

A: Elasticity determines who will bear the burden of taxes: buyers or sellers. When Demand is more…

Q: A subsidy is the opposite of a tax. With a $0.50 tax on the buyers of ice-cream cones, the…

A: Taxes and subsidies implied by the government affect the price of the goods, thus change the…

Q: Demand is Q=60-2p, Supply is Q=3p. Government imposes a per value tax of τ on producers (so,…

A: When a tax is imposed, the price of the commodity increases. The buyers pay more for the same…

Q: Suppose that the supply of oil is elastic and demand for oil is inelastic. If the government taxes…

A: Buyers will bear most of the burden of tax.

Q: Calculate the consumer surplus Calculate the producer surplus before the tax

A:

Q: Suppose the market for cigarette is competitive. An economist estimates the price elasticity of…

A: a) The burden would be shared more by the group which is less elastic. This is because they cannot…

Q: Suppose the price elasticity of demand for smartphones is 0.5 (absolute value), while the price…

A: PED (price elasticity of demand) = 0.5PES (price elasticity of supply) = 1.9Because PES > PED, it…

Q: Government levied a tax on good A. The less elastic the demand is, the greater or the smaller the…

A: The demand for the good is said to be elastic if the quantity demanded of the commodity changes more…

Q: Suppose that the Australian government imposes a sales tax on a product and both buyers and sellers…

A: Meaning of Price Elasticity of Demand: The price elasticity of demand refers to the situation…

Q: Using a diagram explain how when elasticity of a good is zero applied at the level of government…

A: Price elasticity of demand is the measure of sensitivity of demand for goods and services due to a…

Q: Neither the supply of nor the demand for a good is perfectly elastic or perfectly inelastic.…

A: Placing a tax on a good, shifts the supply curve to the left. It leads to a decrease in demand and…

Q: Market A Market B P(dollars) P (dollars) Q (units) Q (units) 5,000 5,000 Consider two markets…

A: ANS Tax incidence will be larger if the change in quantity demanded due to the tax is greater. PED…

Q: The equilibrium price of a good is $13$⁢13. Suppose the government introduces a tax on this good. In…

A: The price at which the quantity demanded equals the quantity supplied is known as the equilibrium…

Q: When an excise tax is imposed on sellers, the of the tax. curve shifts by the amount supply;…

A: Correct answer "supply; upward".