The pros and cons of taxing food to raise tax revenue.

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Answer 1

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Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 8, Problem 5PA

To determine

The pros and cons of taxing food to raise tax revenue.

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Problem 1: After economics class one day, your friend suggests that taxing food would be a good way to raise revenue because demand for food is relatively inelastic. In what sense is taxing food a "good" way to raise revenue? In what sense is it not a good way to raise revenue? Problem 2: The government intends to place a tax on digital platforms such as Netflix, Spotify, HBO, etc. as well as online shopping apps like Lazada and Zalora. The tax may either be placed on the seller or consumer, depending on the final design. Consider that the supply for these online platforms and shopping apps is relatively elastic. To answer this recall lesson about elasticities and basic principles of tax. 3. Suppose that government decides to place the tax on consumers, i.e., tax on subscription fees for digital platforms and VAT for online shopping apps. Assume that there is equal levels of elasticities for both consumer and producer. Who bears the economic cost of the tax? A. Consumer B. Both C.…

After economics class one day, your friend suggests that taxing food would be a good way to raise revenue because the demand for food is quite inelastic. In what sense is taxing food a “good” way to raise revenue? In what sense is it not a “good” way to raise revenue?

why do comsumers pay the tax on goods if the elasticity of demand is less than the elasticty of supply?

Answer 2

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Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 8, Problem 5PA

To determine

The pros and cons of taxing food to raise tax revenue.

Expert Solution & Answer

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Answer 3

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 8, Problem 5PA

To determine

The pros and cons of taxing food to raise tax revenue.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 8, Problem 5PA

To determine