Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Question
Chapter 7, Problem 11QE
To determine
Estimate the percentage of tax the demander and supplier will pay.
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The supply for gasoline is more elastic than the demand of gasoline. If gasoline is taxed $1 per gallon, how will the tax be divided between the buyers and sellers? The sellers will pay more of the tax than the buyers. sellers will pay the entire tax. buyers will pay more of the tax than the sellers. sellers and buyers will split the tax evenly.
TRUE OR FALSE.
If the price elasticity of demand is 2 while the price elasticity of supply is 2, the sellers can pass on to the consumers the 50% of the tax.
A tax will be split equally between buyers and sellers when:
Select one:
a. supply and demand are equal.
b. the government splits the tax equally between buyers and sellers.
c. supply and demand have equal elasticities
d. the elasticity of supply is infinite and the elasticity of demand is zero.
Chapter 7 Solutions
Microeconomics
Ch. 7.1 - Prob. 1QCh. 7.1 - Prob. 2QCh. 7.1 - Prob. 3QCh. 7.1 - Prob. 4QCh. 7.1 - Prob. 5QCh. 7.1 - Prob. 6QCh. 7.1 - Prob. 7QCh. 7.1 - Prob. 8QCh. 7.1 - Prob. 9QCh. 7.1 - Prob. 10Q
Ch. 7 - Prob. 1QECh. 7 - Prob. 2QECh. 7 - How is elasticity related to the revenue from a...Ch. 7 - Prob. 4QECh. 7 - Prob. 5QECh. 7 - Prob. 6QECh. 7 - Prob. 7QECh. 7 - Prob. 8QECh. 7 - Prob. 9QECh. 7 - Prob. 10QECh. 7 - Prob. 11QECh. 7 - Prob. 12QECh. 7 - Prob. 13QECh. 7 - Prob. 14QECh. 7 - Prob. 15QECh. 7 - Prob. 16QECh. 7 - Prob. 17QECh. 7 - Prob. 18QECh. 7 - Prob. 19QECh. 7 - Prob. 20QECh. 7 - Prob. 21QECh. 7 - Prob. 22QECh. 7 - Prob. 1QAPCh. 7 - Prob. 2QAPCh. 7 - Prob. 3QAPCh. 7 - Prob. 4QAPCh. 7 - Prob. 5QAPCh. 7 - Prob. 1IPCh. 7 - Prob. 2IPCh. 7 - Prob. 3IPCh. 7 - Prob. 4IPCh. 7 - Prob. 5IPCh. 7 - Prob. 6IP
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Similar questions
- Can you explain why I got this wrong? I thought that if the supply was more inelastic then the employers would bear more of the tax? Im confused.arrow_forwardsuppose demand is given by q d(p)=1-p and supply q s(p)=p with prices in dollars.if buyers pay a 10 cent tax what is the after tax demand?arrow_forwardSuppose the elasticity of demand for a product is 0 and the elasticity of supply is 1. If the government imposes a tax on the product, then: a) buyers pay a smaller share of the tax than do sellers but both buyers and sellers pay some of the tax. b) seller pays all of the tax c) buyers and sellers pay exactly the same share of the tax. d) buyer pays all of the taxarrow_forward
- What are some examples of goods subject to selective sales taxes?arrow_forwardHow a tax burden is divided between consumers and producers is called tax incidence. Consumers bear most of the tax burden when: Group of answer choices Demand is more elastic than supply The firm decides to pass none of the tax on to the consumer via a higher price. Supply is more elastic than demand. Cross elasticity of demand is .35arrow_forwardDetermine burden of the tax (or the incidence of the tax that falls on consumers and producer). Who gets most of the burden of the tax. Answer on the basis of elasticity. How much tax revenue is expected by the government to be raised for this good per year?arrow_forward
- The efficiency loss of imposing an excise tax is due to: a. Paying a higher price per unit. b. Producing and consuming fewer unitarrow_forwardWhich of the following is NOT the impact from a unit sales tax on a product? Group of answer choices It will shift the market demand curve to the left. It will shift the market supply curve to the left. It will lower the producer surplus. It will lower the consumer surplus.arrow_forwardSuppose supply is P= 4 + (1/4)Qs and demand is P= 58 ―(1/2)Qd. Suppose at the market equilibrium, the price elasticity of supply is 5/9 and the price elasticity of demand is 10/9. Approximately what proportion of a small per unit tax will be paid by consumers?arrow_forward
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