Bundle: Principles of Microeconomics, 7th + MindTap Economics, 1 term (6 months) Printed Access Card
7th Edition
ISBN: 9781305135451
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 12, Problem 7PA
To determine
Increase in the tax revenue.
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Bundle: Principles of Microeconomics, 7th + MindTap Economics, 1 term (6 months) Printed Access Card
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- If a tax of $0.90 is imposed, what is the tax revenue?arrow_forwardSuppose that your state raises its sales tax from5 percent to 6 percent The state revenue commissionerlo~asts a 20 percent increase in sales tax revenue.Is this plausible? Explain.arrow_forwardSuppose 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 on the cigarette sellers. Who, buyers or sellers, would share a heavier tax burden? Explain your answers without calculation.arrow_forward
- Alcohol and tobacco are products that contribute the most to the feral government’s tax revenue. Use the concept of elasticity to explain why.arrow_forwardQ)Economics If the tax elasticity of supply is 0.16, by how much will the quantity supplied increase when the marginal tax rate decreases from 40 to 36 percent?arrow_forwardWhat are the consequences of an increase in direct taxation?arrow_forward
- Why is gasoline heavily taxed? Explainarrow_forwardIf the state government would like to increase tax revenue, please give three examples of products/commodities that the government should impose tax on so that they can collect the highest amount of tax revenue. Please explain your reasons clearly.arrow_forwardWhat is the difference between a general sales tax and an excise tax?arrow_forward
- Do you think profit could be maintained if the tax burden were simply passed on to the consumers in the form of higher selling price? How will this affect sales? Explain.arrow_forwardSuppose in the market for cigarettes, the price elasticity of supply is 2.4 and the price elasticity of demand is −0.8. If an excise tax is imposed on sellers of cigarettes, then _____. a buyers and sellers will pay equal shares of the tax b buyers will pay a greater share of the tax than sellers will c buyers will pay the whole tax d sellers will pay a greater share of the tax than buyers will e sellers will pay the whole taxarrow_forwardSuppose 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.arrow_forward
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