STUDY GUIDE F/MICROECONOMICS
STUDY GUIDE F/MICROECONOMICS
21st Edition
ISBN: 9781307066920
Author: McConnell
Publisher: MCG/CREATE
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Chapter 20, Problem 9DQ
To determine

The tax incidence and its elasticity.

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Suppose demand and supply are given by: (LO3, LO4)Qx d = 14 −  1/2Px and Qx s = 1/4Px  − 1c. How much tax revenue does the government earn with the $12 tax when the new equilibrium quantity is 2 units after tax .
9. True or false? If the statement is false, explain why: LO4 a. An internally held public debt is like a debt of the left hand owed to the right hand. b. The Federal Reserve and federal government agencies hold more than half the public debt. c. As a percentage of GDP, the federal debt held by the public was smaller in 2010 than it was in 1990. d. As a percentage of GDP, the total U.S. public debt is the highest such debt among the world’s advanced industrial nations.
1. Determine burden of the tax under different demand conditions (i.e., when demand is D 1 andwhen demand is D 2 ). Who gets most of the burden of the tax under different demandconditions?2. Prove that the increase (or change) in the price is dependent on the elasticity of demandand supply, under different demand conditions (i.e., when demand is D 1 and when demandis D 2 ).3. What tax revenue is expected by the government if the demand for cigarettes is D 1 ? Is D 2 ?
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