Essentials Of Economics, Loose-leaf Version
8th Edition
ISBN: 9781337096898
Author: N. Gregory Mankiw
Publisher: South-Western College Pub
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Chapter 8.2, Problem 2QQ
The demand for beer is more
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The government wants to stop obesity in children, so they decide to tax soda producers for each unit of soda sold. If demand for soda is relatively elastic, and supply is relatively inelastic will suppliers or consumers pay a larger share of the tax? Briefly explain why.
Question 28
As part of a health program, a city imposes a tax on soda pop. We would expect consumers to pay almost all of this tax if demand is what?
a
inelastic and supply is inelastic
b
inelastic and supply is elastic
c
elastic and supply is elastic
d
elastic and supply is inelastic
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Essentials Of Economics, Loose-leaf Version
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- Who would pay a tax imposed on the supplier when the price elasticity of supply is inelastic and the price elasticity of demand is elastic?arrow_forwardSuppose producers bear most of the burden of a specific tax of 20 cents on staplers. Which ONE statement best describes the supply and demand for staplers? Suppose sandals have an elastic own-price elasticity of demand. If price goes up by 2%, then what happens to quantity demanded?arrow_forwardthe demand for beer is more elastic than the demand for milk. would a tax on beer or a tax on milk have a larger deadweight loss? why?arrow_forward
- Demand for a good is perfectly ELASTIC while supply is regularly shaped. Suppose the government taxes the good. Which of the following statements is true: A. The tax will create deadweight loss B. The tax will NOT create deadweight lossarrow_forwardIf a tax of $1.20 is imposed on consumers in this market, what is the tax revenue?arrow_forwardSuppose households supply 560 billion hours of labor per year and have a tax elasticity of supply of 0.15. If the tax rate is increased by 10 percent, by how many hours will the supply of labor decline?arrow_forward
- When supply curve is horizontal, elasticity of the supply would be ___________?arrow_forwardThe Government places a luxury tax on cars that sell for over $50k. What would happen to the supply of Bentleys?arrow_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 of $45 on the cigarette sellers. By how much would buyers share the tax burden respectively? Show your calculation.arrow_forward
- The figure below represents the market for Gasoline, where initially the equilibrium price was $5.60. The picture shows the effect of a $1.50 tax on gasoline. Using the information from the figure, what is the price elasticity of supply(Using the Midpoint method) when moving from equilibrium to the new supply after the tax?(round your answer to 2 decimal places)arrow_forwardThe figure below represents the market for Gasoline, where initially the equilibrium price was $5.60. The picture shows the effect of a $1.50 tax on gasoline. Using the information from the figure, what is the price elasticity of demand(Using the Midpoint method) when moving from equilibrium to the new demand after the tax?(Input the answer in absolute value and round it to 2 decimal places)arrow_forwardCocoa (Cacao) beans and imported from South America. The government has decided to increase the tax on imported goods such as cocoa. What effect would this have on the market for hot cocoa?arrow_forward
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