Ab 8 Economics This tax would be less effective in reducing the quantity of gasoline consumed if the demand for gasoline were elastic.True or False: Consumers of gasoline are hurt by this tax.O TrueFalseWorkers in the oil industry areby this tax. Congress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $0.50 tax on eachgallon of gasoline sold.Suppose they decided to impose the tax on producers.In the following graph, shows the effect of a $0.50 tax on each gallon of gasoline sold imposed on producers by shifting the demand or supply curve.Price of Gasoline (Dollars per gallon)3.02.500O True3FalseSupplyDemand125Quantity of Gasoline (Thousands of gallons)6DemandTrue or False: The effect of the tax will be the same regardless of whom the tax is imposed on.Supply

Every commodity's price elasticity of demand will be elastic if there are several substitute…

This tax would be less effective in reducing the quantity of gasoline consumed if the demand for gasoline were True or False: Consumers of gasoline are hurt by this tax. True False Workers in the oil industry are by this tax. elastic.

This tax would be less effective in reducing the quantity of gasoline consumed if the demand for gasoline were True or False: Consumers of gasoline are hurt by this tax. True False Workers in the oil industry are by this tax. elastic.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter19: Elasticity

Section: Chapter Questions

Problem 4QP

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Congress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $0.50 tax on each gallon of gasoline sold. Suppose they decided to impose the tax on consumers. In the following graph, shows the effect of a $0.50 tax on each gallon of gasoline sold imposed on consumers by shifting the demand or supply curve. DemandSupply01234563.02.52.01.51.00.50Price of Gasoline (Dollars per gallon)Quantity of Gasoline (Thousands of gallons)Demand Supply True or False: The effect of the tax will be the same regardless of whom the tax is imposed on. True False This tax would be more effective in reducing the quantity of gasoline consumed if the demand for gasoline were elastic. True or False: Consumers of gasoline are helped by this tax. True False Workers in the oil industry are by this tax.
You are an economist in the Internal Revenue System and just heard of a plan to increase the sales tax on a certain widget by $.06. Last year customers purchased about 10 million widgets. The demand curve in the last year was such that a $.01 increasein price decreases sales by 100,000. A study showed that a $.01 increase in price resulted in producers willing to provide 50,000 more widgets to the market. Congress stated that this$.06 tax will increase government revenues by $600,000 and raise the price of each widget by $.06. Is this correct? If so, explain why this is the case and, if not, what is the increase in prices and revenues?
The following graph shows Andrew's weekly demand for apple pie, represented by the blue line. Point A represents a point along his weekly demand curve. The market price of apple pie is $3.00 per slice, as shown by the horizontal black line. (Part 2) From the previous graph, you can tell that Andrew is willing to pay for his 8th slice of apple pie each week. Because he has to pay only $3.00 per slice, the consumer surplus he gains from the 8th slice of apple pie is Suppose the price of apple pie were to fall to $2.25 per slice. At this lower price, Andrew would receive a consumer surplus of from the 8th slice of apple pie he buys. The following graph shows the weekly market demand for apple pie in a small economy. Use the purple point (diamond symbol) to shade the area representing consumer surplus when the price (P) of apple pie is $3.00 per slice. Then, use the green point (triangle symbol) to shade the area representing additional consumer surplus when the price…
Governments often place so-called sin taxes on goods or services such as cigarettes and alcohol. These kinds of taxes are popular with politicians because they are usually more palatable to voters than income taxes. To understand the effect of such a tax, consider the monthly market for rum, which is shown on the following graph. NOTE: the fill in blank options are (increases by a greater and greater amount, increases and then decreases, or increases at a constant rate)
In 1990, the U.S. Congress imposed an excise tax on yachts built in the U.S. and other high-priced luxury products such as jewelry and fur coats with a price over $100,000. The Joint Congressional Committee on Taxation predicted that these so-called “luxury taxes” would raise more than $30 million for the federal government in 1991. In fact, these taxes generated only about $16 million in revenue. Furthermore, about 7500 jobs in the U.S. boat-building industry were lost, so those workers paid less in income taxes. Putting this all together, the luxury tax led to a decrease of $7 million in government revenue rather than the predicted $30 million increase. Why didn’t the plan to raise government revenue by imposing an excise tax on luxury goods work as planned? Explain what mistake Congress made in setting the tax on luxury products.
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. a) What is the equilibrium P* and Q* before the imposition of the tax? b) How many cell phones per year are sold after the tax has been imposed? What price per cell phone do consumers pay after the tax has been imposed? c) What price do producers receive per cell phone after the tax is paid?
can you answer these questions too: Suppose that more consumers prefer the disposable cell phone over the smart phone because the disposable cell phone is more durable than the smart phone. This latest news comes after the fact that firms that manufacture disposable cell phones have the latest technology integrated into their production facilities. What will be the market effect? Going back to question (d), suppose that the price of a disposable cell phone is now set at $11.75. How many disposable cell phones will be demanded by consumers? Whichever curve you’ve determined should be shifted, derive the new function.
According to an article in the Wall Street Journal, in early 2017, President Donald Trump was considering whether to reverse a requirement by the Environmental Protection Agency that oil refiners increase the amount of ethanol they blend with gasoline. If the requirement were to remain, the result would be an increase in demand for ethanol, which is made from corn. Many U.S. farmers can use the same acreage to grow either corn or soybeans. Use TWO SEPARATE demand and supply graphs to analyze the effect on the equilibrium price and equilibrium quantity of CORN and Soybeans resulting from an increase in demand for ethanol Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Who should pay the tax? The following graph gives the labor market for laboratory aides in the imaginary country of Paideia. The equilibrium hourly wage is $10 , and the equilibrium number of laboratory aides is 150 . Suppose the federal government of Paideia has decided to institute an hourly payroll tax of $4 on laboratory aides and wants to determine whether the tax should be levied on the workers, the employers, or both (in such a way that hay the tax is collected from each party). Use the graph input tool to evaluate these thret proposal5; Entering a number into the Tax Levied on Employers feld (inibialy set at adro dallars per hour) shilts the demand curve down by the amount you enter, and entering a number into the Tax Leviod on workers fieid (initially set at acro dollas per bour) shifts the supply curve up by the amount your enter. To determine the before-tax wage for each tar proposal, adjust the amcunt in the wage field unbil the quantity of labor supplied…
The following graph shows the daily market for jeans. Suppose the government institutes a tax of $40.60 per pair. This places a wedge between the price buyers pay and the price sellers receive.
Due to the decrease in the level of water in the lakes of Chapel Hill, the local government wants to reduce the consumption of tap water. They are evaluating two alternatives: to impose a minimum price per gallon of tap water consumed that is five cents greater than the actual price, or to impose an excise tax of five cents on consumption of tap water. Assume that this market is originally in equilibrium. Which of these two alternatives will deliver a bigger reduction in the quantity consumed? Why? Use graphs to explain your answer. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Two months ago, on July 1, 2019, the State of Illinois raised gasoline taxes by $.19 (19 cents) per gallon of gas. Now it is past July 2019 and the market has changed. The gasoline tax is in place for all Illinois gasoline stations. In addition to the gasoline tax increase, Illinois dealers on average are noticing that many of their customers are going across the border to buy gasoline in Wisconsin, Iowa, Missouri and Indiana. Not all customers can do this, as they live far from a border. But there is a clear impact on the market for Illinois gasoline producers. Build a graph showing the impact of the Illinois gas tax increase and the shift of some Illinois consumers to border state gas stations, clearly indicating any shifts in the demand and/or supply curves and the resulting equilibrium Price and Quantity. Provide a narrative explaining the shifts. (Both a graph and a narrative are needed for this question)