Bundle: Principles of Microeconomics, Loose-leaf Version, 8th + MindTap Economics, 1 term (6 months) Printed Access Card
8th Edition
ISBN: 9781337379151
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 6, Problem 6CQQ
To determine
When the impact of tax is mainly on consumers.
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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
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Suppose 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.
Chapter 6 Solutions
Bundle: Principles of Microeconomics, Loose-leaf Version, 8th + MindTap Economics, 1 term (6 months) Printed Access Card
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- Which of the following statements about the relationship between elasticity and tax incidence are true ? Choose one or more:A. A tax on a good for which both demand and supply are relatively inelastic will cause a relatively large transfer of welfare from consumers and producers to the government. B.The incidence of a tax depends on who the tax is placed on. C.If a tax is imposed on a good with a perfectly inelastic demand, then consumers bear the full incidence of the tax. D.When demand is more inelastic than supply, producers bear more of the incidence of a tax. E.When demand is more inelastic than supply, consumers bear more of the incidence of a tax.arrow_forwardQ28 NOT GRADED THIS IS A PRACTICE REVIEWarrow_forward1.The supply of meat is more elastic in the long run than in the short run. Ceteris paribus, as time goes by, the burden of a tax on cattle will be increasingly passed on to the: Group of answer choices Grocer Government Rancher Consumerarrow_forward
- 7.04 Review Suppose a tax of $20 is placed on televisions. If this market's supply and demand curves' are elastic, the burden of this tax falls on: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the sellers b the buyers both the sellers and the buyers.arrow_forwardOnly typed answerarrow_forwardWhen supply is perfectly elastic, who bears the burden of tax? Select one: a. producers b. consumers c. producers and consumers d. sellersarrow_forward
- 1. When the absolute value of price elasticity of demand is greater than the absolute value of price of elasticity of supply, we can say with certainty: A. Consumers bear most of the tax burden. B. Producers bear most of the tax burden. C. The burden is equal for consumers and producers. D. Any of the above E. None of the abovearrow_forwardThe demand for salt is price inelastic and the supply of salt is price elastic. The demand for caviar is price elastic and the supply of caviar is price inelastic. Suppose that a tax of $1 per kilogram is levied on the sellers of salt and a tax of $1 per kilogram is levied on the buyers of caviar. Who would we expect to have to pay most of these taxes? Question 29Answer a. the sellers of salt and the sellers of caviar b. the buyers of salt and the buyers of caviar c. the sellers of salt and the buyers of caviar d. the buyers of salt and the sellers of caviararrow_forwardDon't use Ai and chatgpt. Answer in step by step with explanation.arrow_forward
- 1. Discuss the impact of the imposition of a tax (on the seller). What happens to the following? a. How does elasticity impact the incidence of a tax 2. Discuss two unintended effects of a price ceiling?arrow_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_forwardThe government decides to reduce air pollution by reducing the use of petrol. It imposes £0.50 tax for each litre of petrol sold.a. Should it impose this tax on petrol companies or motorists? Explain carefully, using a supply and demand diagram. b. If the demand for petrol were more elastic, would this tax be more effective or less effective in reducing the quantity of petrol consumed? Explain with both words and a diagram.c. Are consumers of petrol helped or hurt by this tax? Why?d. Are workers in the oil industry helped orarrow_forward
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