Study Guide for Microeconomics
9th Edition
ISBN: 9780134741123
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Chapter 9, Problem 9RQ
Why does a tax create a
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Which of the following is likely to impose a large excess burden (deadweight loss)? Why or why not? Use graphs to illustrate your answers. (Be sure to clearly state your assumptions.)
d. A subsidy on theatre tickets.
e. A tax on cigarettes.
What is deadweight loss? How is it illustrated on a demand and supply diagram? GIve an example of deadweight loss.
Explain why the imposition of the price ceiling does not result in a deadweight loss.
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Study Guide for Microeconomics
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- What is the nature of the deadweight loss accompanying taxes? Why is it often referred to as an excess burden?arrow_forwardWhich of the following is likely to impose a large excess burden (deadweight loss)? Why or why not? Use graphs to illustrate your answers. (Be sure to clearly state your assumptions.) a. A tax on land. b. A tax on gasoline. c. A tax on orange juice.arrow_forwardif deadweight loss is $24,000 under a tax of $4 per unit, what is deadweight loss under a tax of $2 per unit?arrow_forward
- Consider a market with a demand curve given by P = 1000 - 2Q and a supply curve given by P = 3Q. Suppose the government imposes a price ceiling of 800 dollars. What is the deadweight loss? Give your answer as a whole number.arrow_forwardIn the market for gasoline the demand curve is D: Q = 1426 - P and the supply curve is S: Q = P. Calculate the value of the deadweight loss if the government levies a volume tax of t = 42 on consumers.arrow_forwardScenario...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. Is this an example of elastic or inelastic with respect to price? considering price elasticity of demand, is the deadweight loss of a soda/junk-food tax relatively large or relatively small? Why? Would the tax be a good idea? Would it help reduce the number of obese people in the United States?arrow_forward
- How deadweight loss occurs when a small country imposed export taxes?arrow_forwardconsider that the market demand for a textbook is given by P=100-2Q and the market supply is given by P=10+Q. Suppose a price ceiling of $20 is imposed. what is the deadweight loss?arrow_forwardDefine Deadweight loss. When does it occur?arrow_forward
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