Principles of Macroeconomics (MindTap Course List)
7th Edition
ISBN: 9781285165912
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 8, Problem 3QCMC
To determine
The impact of tax on eggs.
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Government levied a tax on good A. The less elastic the demand is, the greater or the smaller the tax burden consumers bear?
Also, is the after-tax equilibrium quantity the greater or smaller?
Consumers’ tax burden: After-tax equilibrium quantity:
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?
Q)Economics
If the tax elasticity of supply is 0.16, by how much will the quantity supplied increase when the marginal tax rate decreases from 40 to 36 percent?
Chapter 8 Solutions
Principles of Macroeconomics (MindTap Course List)
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- Which of the following statements about the relationship between elasticity and tax incidence are true ?Choose one or more: A.The incidence of a tax depends on who the tax is placed on. B.When demand is more inelastic than supply, consumers bear more of the incidence of a tax. C.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. D.When demand is more inelastic than supply, producers bear more of the incidence of a tax. E.If a tax is imposed on a good with a perfectly inelastic demand, then consumers bear the full incidence of the tax. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardWhich of the following statements about the relationship between elasticity and tax incidence are true ? Choose one or more: A.The incidence of a tax depends on who the tax is placed on. B.When demand is more inelastic than supply, consumers bear more of the incidence of a tax. C.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. D.When demand is more inelastic than supply, producers bear more of the incidence of a tax. E.If a tax is imposed on a good with a perfectly inelastic demand, then consumers bear the full incidence of the tax.arrow_forwardWhen demand is elastic Draw a diagram and explain how consumer burden is determined how producer burden is determined who pays the bigger burden of the tax how tax affects the efficiency of the market clearly explain and show the government tax revenue clearly explain and show the deadweight lossarrow_forward
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