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Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
8th Edition
ISBN: 9781337368087
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 8, Problem 3QR
To determine
The taxes and the
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What is the tax incidence of an excise tax when demand is highly inelastic and highly elastic?
How do the relative elasticities of supply and demand determine tax or subsidy incidence?
Would consumer or producer carry the burden of tax if good is elastic? Show on a graph
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Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
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- Using a graph, discuss how the elasticity of demand influences the incidence of a taxarrow_forwardCan you explain what happens when a tax is imposed on the buyer of a product and also what would happen if a tax is imposed on the seller? arrow_forwardWhat is the tax incidence of an excise tax when demand is highly inelastic? Highly elastic? What effect does the elasticity of supply have on the incidence of an excise tax? What is the efficiency loss of a tax, and how does it relate to elasticity of demand and supply?arrow_forward
- What happens to the deadweight loss and taxrevenue when a tax is increased?arrow_forwardWhat is the incidence of an excise tax when demand is highly inelastic? Highly elastic? What effect does the elasticity of supply have on the incidence of an excise tax? What is the effifi ciency loss of a tax, and how does it relate to elasticity of demand and supply?arrow_forwardAssume that the elasticity of demand for fanta is -0.8 while the elasticity of supply is 0.4. What is the pass-through fraction of a tax on fanta to consumers?arrow_forward
- Would consumer or producer carry the burden of tax if good is inelastic? Show on a grapharrow_forwardCan you explain How a tax shifts the demand curve and the supply curve? I don’t know what the correct answer to this isarrow_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 on the cigarette sellers. Who, buyers or sellers, would share a heavier tax burden? Explain your answers without calculation.arrow_forward
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