(a) Explanation Elasticity is the degree of responsiveness from the part of the consumer toward the changes in the price of a commodity in the economy. It means that when the price of a commodity increases, the consumers would decrease the quantity of the commodity and vice versa, which is the response from the consumer. The degree of this responsiveness from the consumer is measured with elasticity measurement. Tax is a unilateral payment made from the public to the government for income earned, for the property and wealth owned, for the profession, and so on. When the commodity is taxed, the price of the commodity would increase in the economy... (b) To determine Use of tax to distort demand as little as possible. (c) To determine Use of tax to discourage the consumption. (d) To determine Use of tax to discourage the production.

14th Edition

ISBN: 9781337696326

Author: William J. Baumol; Alan S. Blinder; John L. Solow

Publisher: Cengage Learning

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Question

Chapter 6, Problem 3TY

(a)

To determine

Use of tax to collect more tax revenue.

(b)

To determine

Use of tax to distort demand as little as possible.

(c)

To determine

Use of tax to discourage the consumption.

(d)

To determine

Use of tax to discourage the production.

Expert Solution & Answer

Chapter 6 Solutions

Economics: Principles & Policy

Ch. 6 - Prob. 1DQ Ch. 6 - Explain why the elasticity of demand formula...Ch. 6 - Prob. 3DQ Ch. 6 - Prob. 4DQ Ch. 6 - Prob. 5DQ Ch. 6 - Prob. 6DQ Ch. 6 - Prob. 1TY Ch. 6 - Prob. 2TY Ch. 6 - Prob. 3TY Ch. 6 - Prob. 4TY

Ch. 6 - Prob. 5TY Ch. 6 - If the price elasticity of demand for gasoline is...Ch. 6 - Prob. 7TY Ch. 6 - Prob. 8TY

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