Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971509
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 8, Problem 4CQQ
To determine
The impact of increased tax on peanut butter.
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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?
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:
Peanut butter has an upward-sloping supplycurve and a downward-sloping demand curve. If a10 cent per pound tax is increased to 15 cents,the government’s tax revenuea. increases by less than 50 percent and may evendecline.b. increases by exactly 50 percent.c. increases by more than 50 percent.d. The answer depends on whether supply ordemand is more elastic.
Chapter 8 Solutions
Principles of Macroeconomics (MindTap Course List)
Ch. 8.1 - Prob. 1QQCh. 8.2 - The demand for beer is more elastic than the...Ch. 8.3 - Prob. 3QQCh. 8 - Prob. 1CQQCh. 8 - Prob. 2CQQCh. 8 - Prob. 3CQQCh. 8 - Prob. 4CQQCh. 8 - Prob. 5CQQCh. 8 - Prob. 6CQQCh. 8 - Prob. 1QR
Ch. 8 - Prob. 2QRCh. 8 - Prob. 3QRCh. 8 - Why do experts disagree about whether labor taxes...Ch. 8 - What happens to the deadweight loss and tax...Ch. 8 - Prob. 1PACh. 8 - Prob. 2PACh. 8 - Prob. 3PACh. 8 - Prob. 4PACh. 8 - Prob. 5PACh. 8 - Prob. 6PACh. 8 - Prob. 7PACh. 8 - Prob. 8PACh. 8 - Prob. 9PACh. 8 - Prob. 10PA
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- Now assume the government raises the tax from $1.00 to $1.50. This causes sale to decline from 10,000 units to 5,000 units. a) calculate the price(tax) elasticity of demand. b) is it elastic, inelastic, or unit elastic? c) what happens to total tax revenue?arrow_forwardThe government intends to impose taxes on alcohol. Its demand has a fixed elasticity -1 and the supply is perfectly elastic. If six million bottles are seldom worth $ 10, how much tax revenue could the government earn by taxing $ 2 per bottle? Tax revenue will be approximately: Plz do fast asaparrow_forwardGovernment levied a tax on good D. The elasticity of the supply changed without changing the no-tax equilibrium point. Because of the change, the buyers’ tax incidence rose. Answer how the elasticity changed: More elastic or Less elastic, and answer how the after-tax equilibrium quantity would change: Decrease or Increase. Hint: If you are not sure, draw a figure with two demand curves. Elasticity: After-tax equilibrium quantity:arrow_forward
- 48. When demand is less elastic than supply, demanders pay a larger share of the tax and sellers pay a larger share of the tax. Select one: a. False b. Truearrow_forwardExplain how changing the price elasticity of demand from elastic to inelastic affects the consumer's economic burden of a tax and the government's collected tax revenues.arrow_forwardHamburger University is losing $4 million dollars per year. The trustees of the university want to increase fees to cover the deficit. The president of the student body wants to decrease fees to cover the deficit. On the basis of this information, which of the following is true? A) The trustees think demand is price inelastic, and the student body president thinks it is price elastic. B) There is no disagreement with respect to elasticity. c )Both the trustee and president of the student body think the price elasticity of demand is one. D) The trustees think demand is price elastic, and the president of the student body thinks it is price inelastic.arrow_forward
- Determine 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_forwardAs price elasticity of demand increases, the burden of a tax gets _______; as price elasticity of supply increases, the burden of a tax gets _________. (Here, you can read "bigger" as "heavier" and "smaller" as "lighter" if that helps.) bigger; bigger smaller; smaller bigger; smaller smaller; biggerarrow_forward
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