EBK ESSENTIALS OF ECONOMICS
8th Edition
ISBN: 8220103599832
Author: Mankiw
Publisher: Cengage Learning US
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Question
Chapter 6, Problem 6CQQ
To determine
When the impact of tax is mainly on consumers.
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Students have asked these similar questions
When a good is taxed, the burden of the tax fallsmainly on consumers ifa. the tax is levied on consumers.b. the tax is levied on producers.c. supply is inelastic and demand is elastic.d. supply is elastic and demand is inelastic
A sales tax will be divided so that buyers pay the full amount if
Select one:
a. supply is perfectly inelastic.
b. supply has unitary elasticity.
c. demand is perfectly inelastic.
d. demand has unitary elasticity.
Suppose that the Australian government imposes a sales tax on a product and both buyers and sellers share the burden of the If the price elasticity of demand for the product is perfectly inelastic. Which of the following is true?
Select one:
a. Sellers would pay more of the tax than buyers.
b. Buyers would pay all of the tax.
c. Buyers and sellers would share the tax burden equally.
d. Sellers would pay all the tax.
Chapter 6 Solutions
EBK ESSENTIALS OF ECONOMICS
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- A sales tax is imposed on good A. The supply of good A is not perfectly elastic or perfectly inelastic. Suppose that the demand for good A becomes more inelastic. (a) Will the tax burden on sellers increase or decrease? (b) Will the DWL increase or decrease?arrow_forwardSuppose that in Australia the price elasticity of steel demand of -1.5 and the price elasticity of steel supply is 1.2. If a tax of $50 per tonne of steel is applied, then: a. The tax burden on consumers will be greater than the tax burden on suppliers. b. The tax burden on suppliers will be greater than the tax burden on consumers. c. The tax burden on consumers will be equal to the tax burden on suppliers. d. The steel price is unlikely to be substantially affected.arrow_forwardWhen airfares between Santa Rosa and Los Angeles averages $69, the quantity consumed is 42,500 tickets. One day, an airline tax is levied equal to $10.00 and output falls to 37,000 tickets. Assume that air travelers end up paying 75% of the tax. Calculate the price elasticity of demand and & interpret coefficient. Use the general formula, not the mid point formula Calculate the price elasticity of supply and interpret coefficient. Use the general formula, not the mid point formula. How do total sales in the airline market before and after the tax support your answer in (n) and/or (o)?arrow_forward
- 1. An example of a market where supply and demand are both inelastic. 2. An example of a market where both supply and demand are both elastic. 3. An example of a market where supply is inelastic and demand is elastic. 4. An example of a market where supply is elastic and deman is inelastic.arrow_forwardThe demand and supply schedule for coffee are: a. If there is no tax on coffee, what is the price and how much coffee is consumed? b. What is the consumer surplus? Show your calculations. c. What is the price elasticity of demand when the price goes up from $4 to $5 dollars? Is the demand for coffee elastic or inelastic? Explain.arrow_forwardQuestion You are in the business of producing and selling popcorn, cheese, crackers, and wine. The government plans to impose a tax on one of these products. Based on the elasticities in the table provided, as a profit-minded business person, which good would you (the business owner) most prefer to have taxed? Price elasticity Price elasticity of supply of demand Popcorn 1.2 2.0 Cheese 2.2 1.1 Crackers 1.6 1.3 Wine 1.7 1.8 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Cheese b. Crackers Рорсоrn Winearrow_forward
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- 1. What is the relationship between total revenue and own-price elasticity of demand? 2. Illustrate a situation when the producer of a good will have a greater tax incidence than a consumer.What does elasticity have to do with tax incidence?arrow_forward14 K You are a policy maker who is interested in increasing tax revenues in order to reduce the Federal budget deficit. One proposal that has been suggested is increase excise taxes on certain goods. Some of the options suggested are: • vacation travel such as cruises • liquor and cigarettes • gasoline . theater and concert tickets Based on your knowledge of elasticity of demand, which items would you choose? Explain.arrow_forward1. Discuss the impact of the imposition of a tax (on the seller). What happens to the following? Price paid by the buyer Price received by the seller Quantity of the good sold Consumer surplus Producer surplus Total surplus 2. Is the impact different if the tax is placed on the buyer? 3. How does elasticity impact the incidence of a tax?arrow_forward
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