Bundle: Principles of Microeconomics, Loose-leaf Version, 8th + MindTap Economics, 1 term (6 months) Printed Access Card
8th Edition
ISBN: 9781337379151
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 8, Problem 5PA
To determine
The pros and cons of taxing food to raise tax revenue.
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Recently there has been discussion in the news about taxing junk food (soft drinks, for example) in an effort to reduce the incidence of obesity in the U.S. Do you think the demand for junk food is elastic or inelastic with respect to price?
Based on your knowledge of the price elasticity of demand, do you think the deadweight loss of a soda/junk-food tax would be relatively large or relatively small? Why? Do you think taxing junk food would be a good idea? Based on your analysis, would it really help reduce the number of obese people in the United States? Explain.
How do the relative elasticities of supply and demand determine tax or subsidy incidence?
Using a graph, discuss how the elasticity of demand influences the incidence of a tax
Chapter 8 Solutions
Bundle: Principles of Microeconomics, Loose-leaf Version, 8th + MindTap Economics, 1 term (6 months) Printed Access Card
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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- Does the Constitution create the power for the State to tax? Justify.arrow_forwardif the government doubled the tax on gasoline,can you be sure that revenue from the gasoline tax will rise ? can you be sure that the deadweight loss from the gasoline tax will rise?arrow_forwardwhat are the ultimate effects to society of shortfalls of tax collection?arrow_forward
- Suppose the supply curve for cars is more elastic than the demand curve for cars. If the government imposes a tax on car sellers, which party (buyers or sellers) will bear more of the tax burden? How will the tax burden change if the government imposed the tax on car buyers, rather than sellers?arrow_forwardDo you think that dead weight loss of soda junk food tax would be relatively large or relatively small? Why? Do you think taxing junk food would be a good idea? Based on your analysis would it really help reduce the number of obese people in the United states?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. 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_forward
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