Tax incidence indicates O A. who is not legally required to send a tax payment to the government. O B. who is legally required to send a tax payment to the government. OC. the burden of a tax on consumers. O D. the burden of a tax on producers. O E. the actual division of the burden of a tax.
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- Both a payroll tax and an excise tax on alcoholraise revenue and, respectively, shrink the marketsfor labor and alcohol. Although both have somefunctions in common, governments may havedifferent goals when levying them. What goalsdo you think motivate a payroll tax? What goalsmotivate an alcohol tax?Suppose the town government imposes a $2 per hour tax on all gardeners. Indicatethe effect of the tax on the market for gardeners. What is the effect on the equilibriumwage and the equilibrium number of gardeners hired? How much does the gardenerreceive? How much does the customer pay? How much does the government receiveas tax revenue?Consider a labor market in which workers are paid the minimum wage. When will it matter for tax incidence whether a payroll tax is imposed on workers or on employers? A.Normally, the statutory imposition of a tax is irrelevant to the actual economic incidence because the party on whom legal liability rests will shift the burden if it can, and the less-elastic party will bear most of the burden of the tax. However, a tax imposed on employers can be shifted to workers earning the minimum wage; employers are not legally constrained from lowering wages further, so they will not bear the full burden. On the other hand, a tax imposed on workers will not be at least partially shifted to employers if the demand for labor is inelastic. Therefore, minimum-wage employers with elastic demand for labor are likely to share some of the burden of a tax imposed on employees. B.Normally, the statutory imposition of a tax is relevant to the actual economic incidence because the party on whom legal…
- In the economy of Agricola, tenant farmers rent theland they use from landowners. If the supply of landis perfectly inelastic, then a tax on land would have_________ deadweight losses, and the burden of thetax would fall entirely on the _________.a. sizable; farmersb. sizable; landownersc. no; farmersd. no; landownersSuppose the federal government requires beer drinkers to pay a $2 tax on each case of beer purchased. c.Can you identify any government revenues? d.Is there any inefficiency, and if so, can you define it and label it on the graph? e. I the producer has an inelastic supply curve, which market participant has the bigger tax burden? Explain.a) The government decides to impose a unit-tax on producers instead of a unit-sales tax on consumers, arguing that this will protect consumers from negative effects of the tax. Your response to this statement should be that O This is incorrect reasoning, because consumers actually will be affected more by the tax on production than a sales tax O This is incorrect reasoning, because consumers are always hit harder by a sales tax O This is incorrect reasoning, because it doesn't matter whether the tax is imposed on sales or production, the impact is the same O This is the correct reasoning, because consumers do not pay for the production. b) Tom likes eBooks and iTunes. eBooks cost $4 and provide a marginal utility of 10; iTunes cost $1 and provide a marginal utility of 3. To maximize utility for the given budget, Tom should O Buy more eBooks and fewer iTunes O Buy fewer eBooks and more iTunes O Not change his current consumption choice
- The burden of a tax on a good is said to fall completely on the producers if the: Select one: a. price paid by consumers for the good declines by the amount of the tax. b. price paid by consumers does not change. c. wages received by workers who produce the good increase by the amount of the tax. d. price paid by consumers for the good increases by the amount of the tax.Calculating tax incidence Suppose that the local government of Jacksonville decides to institute a tax on soda producers. Before the tax, 40 billion liters of soda were sold every year at a price of $10 per liter. After the tax, 33 billion liters of soda are sold every year; consumers pay $12 per liter, and producers receive $7 per liter (after paying the tax). The amount of the tax on a liter of soda is per liter. Of this amount, the burden that falls on consumers is per liter, and the burden that falls on producers is per liter. True or False: The effect of the tax on the quantity sold would have been larger if the tax had beenDon't use chatgpt and make sure you include the graphs needed (a) Suppose in a competitive market, the market demand curve for salt is infinitelyinelastic. What is the impact of a per-unit tax (i.e. a specific tax) on the priceof salt that consumers pay?(b) Suppose the demand curve for butter is Q = 50 − 3P and the supply curve isQ = 2P. Suppose the government announces a per-unit tax of 1 on the priceof butter. Tax on butter can be seen as a ’fat tax’. What is the overall effectof a fat tax on the consumers? (c) If you were a policymaker and wanted to promote a fat tax in the UK, whatwould you cover in your policy campaign?
- Suppose the government removes a tax on buyers of a good and levies a tax ofthe same size on sellers of the good. How does this change in tax policy affectthe price that buyers pay sellers for this good, the amount buyers are out ofpocket including the tax, the amount sellers receive net of tax, and the quantityof the good sold?The figure below displays a market for teenage labor with a minimum wage of $6 per hour How many workers are unemployed at the $6 minimum wage? LS-LD. 30 (=70-40) The government places an hourly tax of $1 per worker on employers. Show the effect of the tax on the demand for labor. With both minimum wage and the labor tax, how many workers do firm employ? What is the incremental effect of the tax on employment? With both minimum wage and the labor tax, how many workers are unemployed? What is the incremental effect of the tax on unemployment?use diagramsa. What is the effect on the equilibrium price and quantity traded in market of theintroduction of a new technology that reduces costs of production for all firms?b. What is the effect on the equilibrium price and quantity traded in a market of a changein tastes that reduces the demand for the product?c. What is the effect on the equilibrium price and quantity traded in a market of theimposition of a tax per unit sold on suppliers?d. What is the effect on the equilibrium price and quantity traded in a market of thepayment of a subsidy per unit sold paid to suppliers?