The figure below represents the perfectly competitive market for pumpkins both before and after the imposition of a tax on suppliers, which is represented by the shift of the supply curve from Supply 1 to Supply 2. Price ($) 8.50 7.25 5.50 0 B 700 A 1,200 Supply 2 Supply 1 Demand Quantity of pumpkins Based on the figure above, who will pay a larger portion of the tax burden? a. Producers pay more of the tax burden than consumers Ob. Producers and consumers pay an equal amount of the tax burden c. Consumers pay more of the tax burden than producers Od. There isn't enough information to determine the distribution of the tax burden

The figure below represents the perfectly competitive market for pumpkins both before and after the imposition of a tax on suppliers, which is represented by the shift of the supply curve from Supply 1 to Supply 2. Price ($) 8.50 7.25 5.50 0 B 700 A 1,200 Supply 2 Supply 1 Demand Quantity of pumpkins Based on the figure above, who will pay a larger portion of the tax burden? a. Producers pay more of the tax burden than consumers Ob. Producers and consumers pay an equal amount of the tax burden c. Consumers pay more of the tax burden than producers Od. There isn't enough information to determine the distribution of the tax burden

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Cost Of Taxation

Section: Chapter Questions

Problem 1PA

See similar textbooks

Similar questions

The market for N-95 masks is perfectly competitive. Market Demand is given by Q=486-2P and Market Supply is given by Q-2P. The government imposes a per-unit tax of $5, what is the market quantity with the tax? Note: you don't need to know who pays the tax to answer this question.
The demand and supply curves for a price taking firm are as follows: Qd = 10- 0.5 Pd Qs= -2+Ps, when Ps>=2 Qs= 0, when Ps<2 where Qd is the quantity demanded when the price consumers pay is Pd, and Qs is the quantity supplied when the price producers receive is Ps. Answer the questions below: Explain in detail (using demand and supply curves), when a tax is imposed, who would burden the tax?
Demand and Supply P = 75 – 3Qd and P = 25 + 2Qs In the above market, a $25 tax is imposed on the sellers. The new supply curve becomes P = 50 + 2Qs. Determine the new market price and market quantity. If the tax is imposed on the sellers of $25 per unit, determine the deadweight loss.
The market for N-95 masks is perfectly competitive. Market Demand is given by Q=464-2P and Market Supply is given by Q=5P. The government imposes a per-unit tax of $2. How much tax revenue does the government collect? Enter a number only, drop the $ sign. Note: you don't need to know who pays the tax to answer this question.
2. Consider a competitive market characterized by the following marketdemand and supply curves.Qd=10000-10P Qs=40P-2000If the government enacts a binding price floor at 500, calculate the resultingconsumer surplus, producer surplus, and deadweight loss.Hint: a diagram might help. Show your work.
The market for N-95 masks is perfectly competitive. Market Demand is given by Q=391-2P and Market Supply is given by Q=4P. The government imposes a per-unit tax of $3 that is paid by the consumer. What is producer surplus?
The market for N-95 masks is perfectly competitive. Market Demand is given by Q-321-2P and Market Supply is given by Q=4P. The government imposes a per-unit tax of $13. What is the absolute value of the deadweight loss due to the tax? Enter a number only, drop the $ sign. Note: you don't need to know who pays the tax to answer this question.
The market supply and demand for a product are shown in the diagram below. (a) Is the price elasticity of supply less than one, equal to one, or greater than one? Explain. (b) Calculate consumer surplus at the equilibrium price. Show your work. (c) Now suppose the government imposes a per-unit tax of $1 on producers. (i) What happens to total revenue received by producers after they pay the tax to the government? Explain. (ii) Will producer surplus increase, decrease, or stay the same? (iii) Will total surplus increase, decrease, or stay the same? Explain.
The following graph represents the demand and supply for blinkies (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. PRICE (Dollars per blinkie) 64.00 48.00 32.00 Demand A B D F 20 C E 40, 48 40 Supply QUANTITY (Blinkies) ?
Price per dozen Dozens of doughnuts Dozens of doughnuts demanded supplied $5.00 12,000 24,000 4.25 15,000 21,000 3.50 18,000 18,000 2.75 21,000 15,000 2.00 25,000 10,000 10. Suppose that a tax of $1.50 per dozen is levied by the government on producers. What is the new equilibrium quantity? What is the new equilibrium price?