Influence of taxes on the efficiency of resource use.
Explanation of Solution
The tax will reduce the efficiency because taxes are the burden imposed by the government on its citizens on the consumption of goods and services. If the burden is imposed on the society as tax, it will lead to problems such as compliance cost and dead weight loss. The compliance cost arises due to the cost of collecting tax. The dead weight loss arises due to the imposition of tax, which reduces the producer and
Dead weight loss: Dead weight loss is a loss of economic efficiency that arises due to the allocative inefficiency when the goods and services are unable to achieve the
Want to see more full solutions like this?
Chapter ST1 Solutions
Bundle: Microeconomics: Private and Public Choice, Loose-leaf Version, 16th + LMS Integrated MindTap Economics, 1 term (6 months) Printed Access Card
- How many dollars in subsidies have gone to fossil fuels (oil, coal, and natural gas) for every dollar that has gone to renewable energy (excluding hydropower)?arrow_forwardHow much of the tax per cell phone is paid by producers and how much is paid by consumers?arrow_forwardDo you think profit could be maintained if the tax burden were simply passed on to the consumers in the form of higher selling price? How will this affect sales? Explain.arrow_forward
- Which one of the two policies, a tax on pork meat consumption, or a tax on pork meat production, is more efficient? Why?arrow_forwardThe tax on cigarettes in New York City is the higher in the nation--$5.85 per pack. Does this tax raise a lot of revenue for New York City? Why or why not?arrow_forwardAccording to the figure, what share of the per unit tax on Direct TV programming is paid by the buyers and what share is paid by the sellers?arrow_forward
- Who bears the greater economic burden of the tax on yellow bell peppers? Who bears the greater economic burden of the tax on yellow bell peppers? a. Government b. Consumer c. Producer d. Consumer and producer, equally.arrow_forward“Because consumers as a group must ultimately pay the total income received by farmers, it makes no real difference whether the income is paid through free farm markets or through price supports supplemented by subsidies financed out of tax revenue.” Do you agree?arrow_forwardMany cities have experienced a substantial decrease in the amount of garbage being collected after they changed from levying a flat tax on each household to a system where the homeowner is charged a fee for each bag or can picked up. Would this have been the result of a change in demand or a change in the quantity demanded? Would you recommend the flat fee or the fee per bag? Why?arrow_forward
- If the Government imposes a tax of $6 per burrito, what will be the total government tax revenue?arrow_forwardwhat would "Government taxes burger producers" be? what would "Price increases to $5 for hamburgers" be? what would "New health craze- "No ground Beef""be? what would "Minimum wage increases to $20" be?arrow_forwardWhat does the research and experimentation tax credit do? Group of answer choices A)Generates significant tax revenue for the federal government. B)It offers a tax benefit to individuals who work in research and development. C)It offers firms a tax reduction depending on hiring of scientific and technical personnel. D)It offers firms a tax reduction depending on how much research and development they do.arrow_forward
- Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningMacroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningMicroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning