Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 10, Problem 4CQQ
To determine
Deadweight loss and corrective tax.
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Students have asked these similar questions
6. All of the following are sources of inefficiency except:
a. public goods.
b. the invisible hand.
c. external costs.
d. price ceilings.
answer. (b. the invisible hand.)
9. Which of the following is the most correct statement about tax burdens?
a. A tax burden falls most heavily on the side of the market that is closer to unit elastic.
b. A tax burden falls most heavily on the side of the market that is elastic.
c. A tax burden is distributed independently of relative elasticities of supply and demand.
d. A tax burden falls most heavily on the market that is inelastic.
answer (c. A tax burden is distributed independently of relative elasticities of supply and demand.)
16. The Coase theorem suggests that:
a. the government should be actively involved in solving the problem of externalities.
b. private parties may be able to solve the problem of externalities on their own.
c. high transaction or bargaining costs are necessary in solving the problem of externalities.
d.…
Is it in the public interest to tax cigarettes? Explain your position using some of the economic concepts or graphs.
Kindly assist with the above two questions.
1) Besides raising revenue, what is the most likely goal of government that enacts a per unit tax.
a) to increase market competition.
b) to correct for a positive externality
c) to correct for a negative externality
d) to encourage production of private goods.
e) to increase profit and encourage production.
2) Country A can produce a gadget at a lower cost than any other producer of gadgets. As a result , Country A must have.
a) a superior gadget making technology
b) an absolute advantage gadget production .
c) a comparative advantage in gadget production.
d) a constant opportunity cost associated with gadget production
e) more factors of production devoted to gadget production than any other country.
Chapter 10 Solutions
Principles of Microeconomics
Ch. 10.1 - Prob. 1QQCh. 10.2 - Prob. 2QQCh. 10.3 - Prob. 3QQCh. 10 - Prob. 1CQQCh. 10 - Prob. 2CQQCh. 10 - Prob. 3CQQCh. 10 - Prob. 4CQQCh. 10 - Prob. 5CQQCh. 10 - Prob. 6CQQCh. 10 - Prob. 1QR
Ch. 10 - Prob. 2QRCh. 10 - Prob. 3QRCh. 10 - Prob. 4QRCh. 10 - Prob. 5QRCh. 10 - Prob. 6QRCh. 10 - Prob. 1PACh. 10 - Prob. 2PACh. 10 - Prob. 3PACh. 10 - Greater consumption of alcohol leads to more motor...Ch. 10 - Prob. 5PACh. 10 - The many identical residents of Whoville love...Ch. 10 - Prob. 7PACh. 10 - Prob. 8PACh. 10 - Prob. 9PACh. 10 - Prob. 10PA
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- What information do we need to find the optimal quantity of public goods? We may want to make the tax burden proportional to benefits from a public good. What problem might arise if we try this approach?arrow_forwardTo determine the optimal amount of a public good to supply, the government must know Question 9Answer a. the price elasticity of demand of each buyer. b. the supply curve of the government. c. everyone's valuation for the public good. d. the revenue of selling the good.arrow_forwardEconomics: Public Economics Question: 1 Figure 3. On the graph, Q represents the quantity of foam and P represents the price of foam. Refer to Figure 3. If the government imposed a corrective tax that successfully moved the market from the market equilibrium to the social optimum, then tax revenue for the government would amount to (do not use $ sign) Guess: 10,000 (with margin: 0) Question: 2 Which of the following statements is correct? a. Corrective taxes are often preferred over direct regulation because they typically reduce externalities at a faster rate. b. Corrective taxes are often preferred over direct regulation because they typically reduce externalities at a higher cost. c. Corrective taxes are often preferred over direct regulation because they typically reduce externalities at a lower cost. d. Corrective taxes distort economic incentives. Question 3: According to the Coase theorem, externalities can be internalized when transactions costs are zero through:…arrow_forward
- Adam Smith proposed taxing ‘Sugar, rum and tobacco’ because they are: “nowhere necessaries of life” “objects of almost universal consumption” Why do you think Adam Smith preferred to impose a tax on luxury goods? Why do you think Adam Smith preferred a tax on ‘objects of almost universal consumption’? Note that ‘Smith’s proposal to tax sugar was not aimed at improving health’ Requirement: Demonstrate a precise understanding of Adam Smith’s meaning and intent, with the appropriate link to relevant economic concepts.arrow_forwardWhich of the following is an example of an exemption? A. people paying less on their taxes because they take care of childrenB. profits earned after costs are subtracted from total earningsC. amount of money used to pay for maintaining national parksD. money paid by corporationsarrow_forwardSuppose the equilibrium quantity in the market for baby formula is 1,000 per month when there is no tax. Then a tax of $0.50 per bottle is imposed. The effective price paid by buyers increases from $2.50 to $2.90 and the effective price received by sellers falls from $2.50 to $2.40. The government’s tax revenue amounts to $475 per month. Which of the following statements is correct? A. After the tax is imposed, the equilibrium quantity of diapers is 900 per month. B. The demand for diapers is more elastic than the supply of diapers. C. The deadweight loss of the tax is $12.50. D. The tax causes a decrease in consumer surplus of $380.arrow_forward
- A government decides that product X is a demerit good and product Y is a public good. Which policy measures is it likely to adopt in relation to the two products? Pick a,b,c, or d a. X- subsidize & Y- impose a maximum price b. X- directly provide & Y- subsidize c. X- impose a maximum price & Y- tax d. X- tax & Y - directly providearrow_forwardWhat can the government do to solve the problem of inadequate levels of public goods? Explain how this solution would help.arrow_forwardDiscuss how governments decide the optimal level public good provision and then consider the impact of taxation due to such provision. Use examples to substantiate your points.arrow_forward
- Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government imposes a per unit tax of $3 on each scoop of Italian gelato, and the price rises to $5. The deadweight loss from the tax is a- $4. b- $2. c- $1. d- $3.arrow_forwardWhich one of the two policies, a tax on pork meat consumption, or a tax on pork meat production, is more efficient? Why? Please solve this but not copysarrow_forwardEconomists have stated that an economy has plunged to a market failure with an uptick in natural gas prices and production which has led to underperformance in other areas of the economy. 1. Identify the type of market failure being discussed in the article and discuss why market failure occurs in this scenario. 2. Suggest a relevant government policy that would yield an efficient outcome and carefully explain the process through which the implementation of the government policy will lead to the optimal outcome. 3. How will the imposition of the chosen government policy impact consumer? surplus, producer surplus and total surplus in this scenario?arrow_forward
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