Congress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $ 0.50 tax for each gallon of gasoline sold. Should they impose this tax on producers or consumers? Explain carefully using a supply-and-demand diagram. If the demand for gasoline were more elastic, would this tax be more effective or less effective in reducing the quantity of gasoline consumed? Explain with both words and a diagram. Are consumers of gasoline helped or hurt by this tax? Why? Are workers in the oil industry helped or hurt by this tax ? Why ?
Congress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $ 0.50 tax for each gallon of gasoline sold. Should they impose this tax on producers or consumers? Explain carefully using a supply-and-demand diagram. If the demand for gasoline were more elastic, would this tax be more effective or less effective in reducing the quantity of gasoline consumed? Explain with both words and a diagram. Are consumers of gasoline helped or hurt by this tax? Why? Are workers in the oil industry helped or hurt by this tax ? Why ?
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand And Government Policies
Section6.2: Taxes
Problem 2QQ
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Congress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $ 0.50 tax for each gallon of gasoline sold.
- Should they impose this tax on producers or consumers? Explain carefully using a supply-and-
demand diagram. - If the demand for gasoline were more elastic, would this tax be more effective or less effective in reducing the quantity of gasoline consumed? Explain with both words and a diagram.
- Are consumers of gasoline helped or hurt by this tax? Why?
- Are workers in the oil industry helped or hurt by this tax ? Why ?
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