Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506756
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 4, Problem 14CQ
To determine
Explain the policy makers seek to set the tax on an economic activity.
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Students have asked these similar questions
"We should impose a 20 percent luxury tax on expensive automobiles (those with a sales price of $75,000 or more) in order to collect more tax revenue from the wealthy." Will the burden of the proposed tax fall primarily on the wealthy?
Why or why not?
When the Government of USA decides to impose a tax on noodles, what impact will this have? *
A.Raises both the price buyers pay and the price sellers receive.
B.Lowers both the price buyers pay and the price sellers receive.
C.Raises the price buyers pay and lowers the price sellers receive.
D.Lowers the price buyers pay and raises the price sellers receive
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.
Chapter 4 Solutions
Macroeconomics: Private and Public Choice (MindTap Course List)
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Similar questions
- What is the nature of the deadweight loss accompanying taxes? Why is it often referred to as an excess burden?arrow_forwardHow does a Tax on Production affect a negatively sloped Demand curve or the Supply Curve? The supply curve shifts to the Left The supply curve shifts to the Right There is no shift, only movement along the Supply Curve The demand curve shifts to the leftarrow_forwardWhich policy increases the consumption of a good? a price floor/a price ceiling / a subsidy/ a taxarrow_forward
- How can tax incidences have a positive and negative impact on the economy?arrow_forwardSuppose that policymakers are considering placing a tax on either of two markets. In Market A, the tax will have a significant effect on the price consumers pay, but it will not affect equilibrium quantity very much. In Market B, the same tax will have only a small effect on the price consumers pay, but it will have a large effect on the equilibrium quantity. Other factors are held constant. In which market will the tax have a larger deadweight loss? Market A Market B The deadweight loss will be the same in both markets. There is not enough information to answer the question.arrow_forwardIn the United States, payroll taxes are essentially assessed evenly between workers and firms. If the supply of labor is less elastic than the demand for labor, are workers or firms more likely to bear the additional burden of an increased payroll tax in the United States? Could this burden be shifted to the firms by assessing the increase in payroll taxes on just firms rather than having firms and workers continue to be assessed payroll taxes equally?arrow_forward
- Suppose that the government imposes a tax on cigarettes, use the diagram below to answer the questions. D is the demand curve before tax, S is the supply curve before tax and ST is the supply curve after the tax. (a) For the market for cigarettes with the tax, calculate (I) the tax (ii) price paid by consumers (iii) price recieved by producers (iv) quantity of cigarettes soldarrow_forwardCan you explain How a tax shifts the demand curve and the supply curve? I don’t know what the correct answer to this isarrow_forwardWhat is the equilibrium P* and Q* before the imposition of the tax?arrow_forward
- Suppose that the government imposes a tax on cigarettes. Use the diagram below to answer the questions. D is the demand curve before tax, S is the supply curve before tax and ST is the supply curve after tax. For the market for cigarettes without the tax, indicate: (i) Price paid by consumers (ii) Price paid by producers (iii) Quantity of cigarettes sold (iv) Buyer's reservation price (v) Seller's reservation pricearrow_forwardif the government doubled the tax on gasoline,can you be sure that revenue from the gasoline tax will rise ? can you be sure that the deadweight loss from the gasoline tax will rise?arrow_forward
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