Economics Plus MyLab Economics with Pearson eText (2-semester Access) -- Access Card Package (6th Edition) (The Pearson Series in Economics)
6th Edition
ISBN: 9780134417295
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 18, Problem 18.3.9PA
Subpart (a):
To determine
Changes in the demand for cigarettes when the tax imposes.
Sub part (b):
To determine
Changes in government revenue.
Sub part (c):
To determine
Burden of tax.
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Briefly explain (3-5 sentences) why it usually makes sense for the government to impose taxes on markets (and products) that have an inelastic demand instead of markets with an elastic demand.
Macmillan Learning
The graph shows the demand and supply of bungee jumps in
Xtremeland. The government decides to impose an excise tax
on bungee jumps to help pay for the high number of back and
neck injuries.
What would the government's tax revenue be if it imposes a
tax of $80 on each jump?
What would the government's tax revenue be if it imposes a
tax of $40 on each jump?
S
What would the government's tax revenue be if it imposes a
tax of $120 on each jump?
$
S
Price of bungee jumps ($)
200
Supply
180
160.
140
120-
100.
80
60.
40
20
0
10,000
30,000
50,000
Quantity of bungee jumps
Demand
70,000
18. The U.S. Senate is considering a bill that would tax the sale of laptop computers in order to fund a computer educa-
tion program for presidential hopefuls. The Congressional Budget Office (CBO) estimates that if it implements a low
tax of $12 per laptop, revenue should be sufficient to exactly fund the program. The CBO also estimates that a high
tax of $230 per laptop will exactly fund the program.
a. How can a low tax and a high tax raise exactly enough money to fund the program? Illustrate your answer using
a graph.
b. Suppose that you are an economic advisor to the Senate Finance Committee, tasked with analyzing the economic
impact of the tax proposals. Which proposal do you recommend, and why?
Chapter 18 Solutions
Economics Plus MyLab Economics with Pearson eText (2-semester Access) -- Access Card Package (6th Edition) (The Pearson Series in Economics)
Ch. 18 - Prob. 18.1.1RQCh. 18 - Prob. 18.1.2RQCh. 18 - Prob. 18.1.3RQCh. 18 - Prob. 18.1.4RQCh. 18 - Prob. 18.1.5PACh. 18 - Prob. 18.1.6PACh. 18 - Prob. 18.1.7PACh. 18 - Prob. 18.1.8PACh. 18 - Prob. 18.1.9PACh. 18 - Prob. 18.1.10PA
Ch. 18 - Prob. 18.1.11PACh. 18 - Prob. 18.1.12PACh. 18 - Prob. 18.2.1RQCh. 18 - Prob. 18.2.2RQCh. 18 - Prob. 18.2.3RQCh. 18 - Prob. 18.2.4RQCh. 18 - Prob. 18.2.5PACh. 18 - Prob. 18.2.6PACh. 18 - Prob. 18.2.7PACh. 18 - Prob. 18.2.8PACh. 18 - Prob. 18.2.9PACh. 18 - Prob. 18.2.10PACh. 18 - Prob. 18.2.11PACh. 18 - Prob. 18.2.12PACh. 18 - Prob. 18.2.13PACh. 18 - Prob. 18.3.1RQCh. 18 - Prob. 18.3.2RQCh. 18 - Prob. 18.3.3PACh. 18 - Prob. 18.3.4PACh. 18 - Prob. 18.3.5PACh. 18 - Prob. 18.3.6PACh. 18 - Prob. 18.3.7PACh. 18 - Prob. 18.3.8PACh. 18 - Prob. 18.3.9PACh. 18 - Prob. 18.3.10PACh. 18 - Prob. 18.3.11PACh. 18 - Prob. 18.4.1RQCh. 18 - Prob. 18.4.2RQCh. 18 - Prob. 18.4.3RQCh. 18 - Prob. 18.4.4RQCh. 18 - Prob. 18.4.5RQCh. 18 - Prob. 18.4.6PACh. 18 - Prob. 18.4.7PACh. 18 - Prob. 18.4.8PACh. 18 - Prob. 18.4.9PACh. 18 - Prob. 18.4.10PACh. 18 - Prob. 18.4.11PACh. 18 - Prob. 18.4.12PACh. 18 - Prob. 18.4.13PACh. 18 - Prob. 18.4.14PACh. 18 - Prob. 18.4.15PA
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