2.Suppose in problem 1 that a tax of $1 per pack is imposed. a.How many packs will be consumed? b.Is this rate too high, too low, or the socially optimal rate of consumption?
2.Suppose in problem 1 that a tax of $1 per pack is imposed. a.How many packs will be consumed? b.Is this rate too high, too low, or the socially optimal rate of consumption?
Chapter5: Price Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 3SQP
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ANSWER THE QUESTION NUMBER 2 PLEASE
1.The demand and supply schedules for coffee are given in the table.
a.If there is no tax on coffee, what is the price of a cup of coffee and how much coffee is bought?
b.If a tax of 75¢ a cup is introduced, what is the price of a cup of coffee and how much coffee is bought? Who pays the tax?
2.Suppose in problem 1 that a tax of $1 per pack is imposed.
a.How many packs will be consumed?
b.Is this rate too high, too low, or the socially optimal rate of consumption?
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