EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 9780100605930
Author: Blinder
Publisher: YUZU
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Question
Chapter 17, Problem 4TY
(a)
To determine
The
(b)
To determine
The equilibrium price and equilibrium quantity after imposing tax.
(c)
To determine
Impact of imposing tax on producer and consumer.
(d)
To determine
Impact of tax imposed on producer and shift into consumers.
(e)
To determine
The excess burden of tax.
(f)
To determine
The impact of imposing tax on consumption and its outcome.
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Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 15 million cases of cola were sold every month at a price of $7 per case. After the tax, 9 million cases of cola are sold every month; consumers pay $10 per case, and producers receive $4 per case (after paying the tax).
A. The amount of the tax on a case of cola is ___ per case
B. Of this amount, the burden that falls on consumers is ___ per case
C. and the burden that falls on producers is ___ per case
True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on consumers.
Miller wants to discourage the energy drink market with a $2 tax on energy drinks (that on average cost $2.50) Cruz thinks the tax is too high, so Miller makes the tax $1.
draw a graph with the demand curve, supply curve, equilibrium price/quantity, tax price, tax incidence, tax revenue, and dead weight loss. Locate the tax revenue and indicate which letters show that on the graph. Who pays more of the tax- consumers or producers? How does the graph show this?
Miller wants to discourage the energy drink market with a $2 tax on energy drinks (that on average cost $2.50) Cruz thinks the tax is too high, so Miller makes the tax $1.
draw a graph with the demand curve, supply curve, equilibrium price/quantity, tax price, tax incidence, tax revenue, and dead weight loss. First, Locate the equilibrium price and quantity. Which letters represent producer and consumer surplus before the tax? Which letters after the tax? Did the surplus increase or decrease?
Chapter 17 Solutions
EBK ECONOMICS: PRINCIPLES AND POLICY
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- Suppose that the government decides to charge cola consumers an excise tax. Before the tax, 12 million cases of cola are sold every month at a price of $3.50 per case. After the tax, 6million cases of cola are sold every month; consumers pay $4.00 per case and producers receive $2.00 per case. a. What is the excise tax on cola?b. On whom does the incidence of the tax fall more heavily?c. How much government revenue will be generated by the excise tax?arrow_forwardQ. Assume that the demand for whiskey is Qd=9-0.5P and the supply of whiskey is Qs=P. a. Calculate the equilibrium price and quantity and show them on a supply and demand diagram. b. Suppose the government wants to discourage whiskey consumption and so levies a $2 tax for each unit of whiskey sold. Draw this on the diagram and calculate the new equilibrium price and quantity. How much revenue will this tax generate for the government?arrow_forwardAttached is a graph diagram depicting the market for soft drinks. If an excise tax equal to $1 per liter is levied on soft drink sellers, please answer the following questions: a. The new equilibrium quantity of soft drinks bought and sold would be ___________ million liters. b. The new equilibrium price paid by buyers of soft drinks would be $__________ per liter. c. The new equilibrium price received by sellers (after-tax) would be $__________ per liter.arrow_forward
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