Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 6, Problem 5PA
To determine
The impact of payroll tax on workers and firms.
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A senator wants to raise tax revenue and make workers better off. A staff member proposes raising the payroll tax paid by firms and using part of the extra revenue to reduce the payroll tax paid by workers. True or False: This arrangement would most likely make workers worse off because the tax wedge would be larger. True False
During the Summer of 2022, gas prices rose well over $5.00 per gallon. In response, President Biden called for a 3-month Federal Gas Tax Holiday, which would remove the $0.18 per gallon federal tax on gasoline. Under what circumstances would you expect consumers to reap the majority of the benefits from the removal of the gasoline tax? Under what circumstances would you expect gasoline retailers to reap the majority of the benefits from the removal of the gasoline tax?
Does a tax on buyers affect the demand curve?
Chapter 6 Solutions
Essentials of Economics (MindTap Course List)
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- How 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_forwardWhen 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 receivearrow_forwardIf tax incidence is not affected by whether the government makes buyers or sellers pay the tax then which factors determine the tax incidence?arrow_forward
- If buyers are required to pay a tax on top of the price, buyers' willingness to pay will: decrease and the demand curve will shift up. increase and the demand curve will shift down. increase and the demand curve will shift up. decrease and the demand curve will shift down.arrow_forwardWhat is the equilibrium P* and Q* before the imposition of the tax?arrow_forwardIf the state government would like to increase tax revenue, please give three examples of products/commodities that the government should impose tax on so that they can collect the highest amount of tax revenue. Please explain your reasons clearly.arrow_forward
- Suppose the California legislature passed a sweeping law to lower the number of regulations for building homes such as decreasing the parking requirements and setback requirements. Suppose there is a housing tax. What is the effect of this law on the PES for housing? What effect would this law have on the tax burden for buyers?arrow_forwardWould consumer or producer carry the burden of tax if good is inelastic? Show on a grapharrow_forwardSeeing a golden opportunity to increase its revenue, assume the City of Boston has decided to levy a per ticket tax of $5, to be paid by the ticket buyer. Boston sports fans, a famously civic-minded lot, dutifully send in the $5 per ticket. Draw a well-labeled graph showing the impact of the tax. On whom does the tax burden fallbuyers, sellers, or both? Why?arrow_forward
- What happens to the deadweight loss and taxrevenue when a tax is increased?arrow_forwardDo 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.arrow_forwardIf the government removes a tax on a good, then the price paid by buyers will a)increase, and the price received by sellers will increase b)increase, and the price received by sellers will decrease c)decrease, and the price received by sellers will increase d)decrease, and the price received by sellers will decreasearrow_forward
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