Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 6, Problem 20P
To determine
The effect of incidence of tax and tax revenue raised in short run and long run for the given tax over time.
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Students have asked these similar questions
Would you usually expect elasticity of demand or supply to be higher in the short run or in the long run? Why?
Describe how the elasticity of demand behaves in the long run?
As the time frame shifts from the short run to the long run, what happens in the market for milk with a binding price floor when the surplus is bought up by government?
A) Dairy farmers are increasingly willing ot substitute toward producing more milk, and the supply curve for milk becomes more elastic
B) Dairy farmers are increasingly willing to substitute away from producing milk, and the supply curve of milk becomes less elastic
C) There are no changes, and the elasticity of supply for milk remains unchanged.
D) dairy farmers are less willing to substitute away from producing the good, and the supply curve becomes more elastic
E) the predicted losses for dairy farmers will eventually cause many farmers to go out of business and the supply curve shifts to the left and become less elastic
Chapter 6 Solutions
Exploring Economics
Ch. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Explain why using the midpoint formula for...Ch. 6 - Prob. 7PCh. 6 - If the elasticity of demand for hamburgers equals...Ch. 6 - Evaluate the following statement: Along a...Ch. 6 - If the midpoint on a straight-line demand curve is...
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Similar questions
- interpret the long-run and short-run elasticitiesarrow_forwarda)Show in four diagrams the incidence of an indirect (specific) tax in the case of elastic and inelastic demand and elastic and inelastic supply. b)Consider supply in the long run. Assume that a specific tax is imposed on a good that was previously untaxed. How will the incidence of this tax change as time passes?arrow_forwardOnly typed answer Green et al. (2005) estimate that the demand elasticity is minus−0.47 and the long-run supply elasticity is 12.0 for almonds. The corresponding elasticities are minus−0.68 and 0.73 for cotton and minus−0.26 and 0.64 for processing tomatoes. If the government were to apply a specific tax to each of these commodities, what incidence would fall on consumers? The incidence of a specific almond tax that would fall on consumers is nothing___percent. (Enter numeric responses using real numbers rounded to one decimal place.)arrow_forward
- Correctly illustrate the market (supply and demand curve). Make sure to correctly shade the area of the tax. a. Washington state has an rideshare market that shares rides at a price of P. At that price, Q miles of rides will be share in one week. Elasticity of supply: relatively inelastic Elasticity of demand: relatively elastic Suppose the Washington state were to levy an excise tax collected by producers.arrow_forwardThe ability of firms to enter and extt a market overtime means that. in the long run.a. the demand curve is more elastic.h thP. f'I P.m~n rl r.urvA i~ lA!=>~ Alt:t~ti t .c. the supply curve is more elastic.d. the supply curve is tess elastic.arrow_forwardConsider the market for BP gasoline. If the market has a very elastic supply and a very inelastic demand, how would the burden of a tax on BP gasoline be shared between producers and consumers? Draw a graph to support your answer.arrow_forward
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