Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 8, Problem 10MC
To determine
Shift of supply curve.
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The government imposes a $2.50 per-unit tax on the consumption of good X. As a result the
A) supply curve for good X shifts leftward and the price of good X rises.
B) quantity demanded of good X falls and the price of good X rises.
C) demand curve for good X shifts leftward and the price of good X falls.
D) demand curve for good X shifts rightward and the price of good X rises.
E) supply curve for good X shifts leftward and the price of good X falls.
1. If the price of a good increases while the quantity of the good exchanged on markets decreases, then the most likely explanation is that there has been a decrease in ___________ 2. In order to reduce shortages, business owners will likely _________________ prices. 3. If bad weather destroys much of the wheat crop, then growers will offer ____________ wheat at each and every price. 4. The price of wheat rises due to a bad drought. As a result, the supply of bread and pasta will ____________ 5. A government subsidy to the producers of a product will _______________ supply of a product. 6. A market in which sellers illegally sell to buyers at higher than legal prices is called ________________ 7. Market ________________ refers to a situation in which market price is at a level where there is neither a shortage nor a surplus. 8. When the government taxes suppliers for the goods they sell, the ________________ curve shifts leftwards
Draw 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)
Chapter 8 Solutions
Managerial Economics: A Problem Solving Approach
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