EBK PRINCIPLES OF MICROECONOMICS
12th Edition
ISBN: 9780134069180
Author: Oster
Publisher: YUZU
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Chapter 19, Problem 3.1P
To determine
Identify the role of the taxes on necessities.
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Thoroughly analyze the impact of taxes on tobacco through the perspective of a smoker (a consumer in the tobacco market) worried about rising prices.
Focus on price elasticity in your answer.
How can the government improve tax collections without imposing much tax to the consumer?
If the government decide to increase taxes on sugar, who do you think will carry the burden of taxation? Please justify your answer
Chapter 19 Solutions
EBK PRINCIPLES OF MICROECONOMICS
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- Suppose 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_forwardExplain the role of taxation in reducing excess demand?arrow_forward22. If the government decide to increase taxes on sugar, who do you think will carry the burden of taxation? Please justify your answer and explain.arrow_forward
- How a tax burden is divided between consumers and producers is called tax incidence. Consumers bear most of the tax burden when: Group of answer choices Demand is more elastic than supply The firm decides to pass none of the tax on to the consumer via a higher price. Supply is more elastic than demand. Cross elasticity of demand is .35arrow_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_forwardIn general, on which side of the market does a tax burden fall more heavily? on the side of the market that is perfectly elastic on the side of the market that is less elastic on the side of the market that is more elastic on the side of the market that is unit elasticarrow_forward
- If 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_forwardThe tax on cigarettes in New York City is one of the highest in the nation—$5.85 per pack. What are some of the secondary effects of this tax? Check all that apply.arrow_forwardWhat determines whether the buyer or seller pays the bulk of the 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_forwardWhat are pros and cons to increasing the gasoline tax?arrow_forwardDo you think that dead weight loss of soda junk food tax would be relatively large or relatively small? Why? Do you think taxing junk food would be a good idea? Based on your analysis would it really help reduce the number of obese people in the United states?arrow_forward
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