Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134079271
Author: CASE
Publisher: PEARSON
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Question
Chapter 19, Problem 4.1P
(a)
To determine
Identify the role of taxes on externalities.
(b)
To determine
Identify the role of distorting tax on economic welfare.
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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.
I need help with question 2. You guys have already answered number 1.
Externalities and Tax Incidence 1. Sketch a supply and demand framework for paved driveways. Who do you suppose is less elastic, consumers or sellers? Be sure your model reflects this (there are no wrong choices of who is less elastic; just take your pick if you don't have a good idea). 2. Assuming that impervious surfaces are damaging to waterways, include a new supply curve into model that reflects all costs of production. 3. Suppose a tax is imposed on the buyers of driveways. Suppose the tax is exactly the right amount to make the quantity achieved equal to the new equilibrium. Sketch the change(s) to the market with your tax imposed. Identify the losses to consumers and suppliers, dead weight loss and government revenue. Discuss dead weight loss in this context. 4. What will likely to happen to employment in the production of driveways? Why? 5. What other policy alternatives, generally, are available to address…
Give at least 2 examples of how some of the principles of tax design can conflict with each other. You can use equity principles or efficiency principles or both.
Chapter 19 Solutions
Principles of Economics (12th Edition)
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