EBK PRINCIPLES OF MICROECONOMICS
7th Edition
ISBN: 9781305892811
Author: Mankiw
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 6, Problem 5PA
To determine
The impact of payroll tax on workers and firms.
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The tax on cigarettes in New York City is one of the highest in the nation—$5.85 per pack.
What are some of the secondary effects of this tax? Check all that apply.
A senator wants to raise tax revenue and makes worker 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.would this accomplis the senator's goal?Explain.
On a graph of the labor market, show the effects of an increase in the payroll tax.
Chapter 6 Solutions
EBK PRINCIPLES OF MICROECONOMICS
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- Suppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.8 and 0.7 respectively. Suppose the government imposes a per-unit tax of $45 on the cigarette sellers. By how much would buyers share the tax burden respectively? Show your calculation.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_forwardSuppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.8 and 0.7 respectively. Suppose the government imposes a per-unit tax of $45 Some economists believe that a sales tax, in general, is undesirable. Explain. Despite this, why do most countries still impose a tax on cigarette? Explain plausible arguments.arrow_forward
- Economists disagree on whether labor taxes cause small or large deadweight losses. This disagreement arises primarily because economists hold different views about the size of labor taxes. the importance of labor taxes imposed by the federal government relative to the importance of labor taxes imposed by the various states. the elasticity of labor demand. the elasticity of labor supply.arrow_forwardThe following graph represents the demand and supply for pinckneys (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario.arrow_forwardSuppose that the supply of oil is elastic and demand for oil is inelastic. If the government taxes oil, who will bear most of the tax burden?arrow_forward
- What happens to a country's economy if there is a high tax for the company that earns more in that country?arrow_forwardDraw a diagram where sellers have to pay a $X tax to the Government on each unit that they sell. Then this tax is decreased to $Y. Draw a demand and supply diagram showing this tax reduction causing an increase in Government taxation revenue. Please provide a written explanation for your diagram and discuss its policy implications. ( maximum word limit: 250 words)arrow_forwardHow does a tax on a good affect the price paid by buyers, price receive by sellers, and the quantity sold?arrow_forward
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