Principles of Microeconomics
Principles of Microeconomics
Peanut butter has an upward-sloping supply curve and a downward-sloping demand curve. If a 10 cent per pound tax is increased to 15 cents, the government's tax revenue
a. increases by less than 50 percent and may even decline.
b. increases by exactly 50 percent.
c. increases by more than 50 percent.
d. The answer depends on whether supply or demand is more elastic.
The tax is the unilateral payment from the people to the government. Tax is the main source of income of the government which can be used for carrying on the public expenditure of the government. The main types of taxes include the income tax, wealth tax and the professional tax. When there is a tax, it will lead to fall in the consumer surplus as well as in the producer surplus. As a result, the total surplus which is the summation of the consumer surplus and the producer surplus will fall and this fall will occur in the total surplus due to taxation which is known as the deadweight loss due to tax.
Option (a):
The demand curve is downward sloping, whereas the supply curves is upward sloping, and the increase in the tax rate from 10 percent to 15 percent will have less than 50 percent increase in the revenue to the government because both the curves are elastic and the increase in the tax rate will increase the price level and this will reduce the demand for the product. Thus, the total tax revenue will increase only by less than 50 percent and thus, option 'a' is correct.
Option (b):
Since both the demand and supply curves are elastic, the increase in the price due to increase in tax will reduce the total revenue and the tax revenue through the sale of the product...
Chapter 8 Solutions
Additional Business Solutions
Find more solutions based on key concepts
Show solutions addWater is necessary for life. Is the marginal benefit of a glass of water large or small?
Principles of Economics (MindTap Course List)
Discuss the differences between statistics as numerical facts and statistics as a discipline or field of study.
STATISTICS F/BUSINESS+ECONOMICS-TEXT
(Total Cost and Marginal Cost) Complete the following table, assuming that each unit of labor costs $75 per day...
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Describe a change in the tax code that might increase private saving. If this policy were implemented, how woul...
Brief Principles of Macroeconomics (MindTap Course List)
A senator renounces his past support for protectionism: The U.S. trade deficit must be reduced, but import quot...
Principles of Macroeconomics (MindTap Course List)
The accompanying table gives information on the type of coffee selected by someone purchasing a single cup at a...
Probability and Statistics for Engineering and the Sciences
TIME TO REACH A FINANCIAL GOAL You have 33,556.25 in a brokerage account, and you plan to deposit an additional...
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Ethics and Current Liabilities Many long-term loans have contractual restrictions designed to protect the lende...
Cornerstones of Financial Accounting
What are the main objectives of performance appraisal?
Foundations of Business (MindTap Course List)
PRO FORMA INCOME STATEMENT Austin Grocers recently reported the following 2018 income statement (in millions of...
Fundamentals of Financial Management (MindTap Course List)
Persuasive Claim: Overpriced Hotel Breakfast in Las Vegas. As regional manager for a national restaurant chain,...
Essentials of Business Communication (MindTap Course List)
What are the principal reasons for using a special payroll bank account?
Financial & Managerial Accounting
Should stockholder wealth maximization be thought of as a long-term or a short-term goal? For example, if one a...
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Vertical analysis Two income statements for Cornea Company follow: Cornea Company Income Statements For the Yea...
Corporate Financial Accounting
What is three-tier architecture? What are some of its advantages over two-tier architecture?
Accounting Information Systems
Explain the meaning of (A) differential revenue, (B) differential cost, and (C) differential profit (loss).
Financial And Managerial Accounting
Governments may intervene in a market economy in order to a. protect property rights. b. correct a market failu...
Essentials of Economics (MindTap Course List)
EFFECTS OF TRANSACTIONS (BALANCE SHEET ACCOUNTS) Jon Wallace started a business. During the first month (March ...
College Accounting, Chapters 1-27
Strategic Thinking Blueprints77 Strategic thinking involves a mental blueprint that includes a desired future, ...
Management, Loose-Leaf Version
The following table summarizes the rules of debit and credit. For each of the items (a) through (l), indicate w...
Financial Accounting
Mimasca Inc. manufactures various holiday masks. Each mask is shaped from a piece of rubber in the molding depa...
Managerial Accounting: The Cornerstone of Business Decision-Making
Discuss the external environment of marketing and explain how it affects a firm
MKTG 12:STUDENT ED.-TEXT
What is an XBRL tag?
Accounting Information Systems
Explain how a trial balance and a balance sheet differ.
College Accounting (Book Only): A Career Approach
Oakwood Inc. is a public enterprise whose shares are traded in the over-the-counter market. At December 31, 201...
Intermediate Accounting: Reporting And Analysis
Explain how relation-ship marketing can move customers up the loyalty ladder.
Contemporary Marketing
The FinancialTimes/Harris Poll is a monthly online poll of adults from six countries in Europe and the United S...
Statistics for Business & Economics, Revised (MindTap Course List)
The following table shows Hillarys demand schedule for Cherry Blossom Makeup. Graph Hillarys demand curve.
Exploring Economics
How does inflation distort ratio analysis comparisons for one company over time (trend analysis) and for differ...
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Based on the data presented in Exercise 1-16, identify those items that would appear on the income statement.
Financial Accounting
Vertical analysis of balance sheet Balance sheet data for Novak Company on December 31, the end of two recent f...
Financial & Managerial Accounting
LOAN AMORTIZATION AND EAR You want to buy a car. and a local bank will lend you 20,000. The loan will be fully ...
Fundamentals of Financial Management (MindTap Course List)
The chart of accounts of the Barnes School is shown here, followed by the transactions that took place during O...
College Accounting (Book Only): A Career Approach
Capital expenditure and depreciation; parital-year depreciation Willow Creek Company purchased and installed ca...
Accounting (Text Only)
What is a market? What are the characteristics of a perfectly competitive market?
Principles of Macroeconomics (MindTap Course List)
Discuss the significance of having a separate organizational unit for the HR function (reporting to the vice pr...
Pkg Acc Infor Systems MS VISIO CD
PURPOSE OF ACCOUNTING Match the following users with the information needed. 1. Ownersa. Whether the firm can p...
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Key Concept: Shifting the production possibilities curve Which would be least likely to cause the production po...
Economics For Today
The more economic rent a person receives in his job, the less likely he is to leave the job and the more conten...
Economics (MindTap Course List)
Statement of cash flowsindirect method List the errors you find in the following statement of cash flows. The c...
Corporate Financial Accounting
List the penalties imposed on the employer for the following: a. Filing Form 941 late. b. Seven days late makin...
PAYROLL ACCT.,2019 ED.(LL)-TEXT
At the present time, the beginning of year 1, the Barney-Jones Investment Corporation has 100,000 to invest for...
Practical Management Science
Depreciation by two methods; sale of fixed asset New tire retreading equipment. acquired at a Cost of $140,000 ...
Survey of Accounting (Accounting I)
What is the relationship among contract law, the UCC, and commercial law?
Purchasing and Supply Chain Management
A Balanced Scorecard expresses the complete story of a companys strategy through an integrated set of financial...
Cornerstones of Cost Management (Cornerstones Series)
