6. Governor Gavin Newsom wants to raise money. He has a choice of imposing an excise tax of the same amount on one of two previously untaxed goods: restaurant meals or sales of gasoline. Both the demand and the supply of restaurant meds are more elastic than the demand for and the supply of gasoline. Do the following: a. Draw a diagram that illustrates the tax revenue and deadweight loss from taxation of restaurant meals b. Draw a diagram that illustrates the tax revenue and deadweight loss from taxation of gasoline. If the goal was to maximize government tax revenue, which item should be taxed? |Why? c.
6. Governor Gavin Newsom wants to raise money. He has a choice of imposing an excise tax of the same amount on one of two previously untaxed goods: restaurant meals or sales of gasoline. Both the demand and the supply of restaurant meds are more elastic than the demand for and the supply of gasoline. Do the following: a. Draw a diagram that illustrates the tax revenue and deadweight loss from taxation of restaurant meals b. Draw a diagram that illustrates the tax revenue and deadweight loss from taxation of gasoline. If the goal was to maximize government tax revenue, which item should be taxed? |Why? c.
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Application: The Cost Of Taxation
Section: Chapter Questions
Problem 4CQQ
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Question
![6. Governor Gavin Newsom wants to raise money. He has a choice of imposing an excise tax of
the same amount on one of two previously untaxed goods: restaurant meals or sales of gasoline.
Both the demand and the supply of restaurant meds are more elastic than the demand for and
the supply of gasoline. Do the following:
a. Draw a diagram that illustrates the tax revenue and deadweight loss from taxation of
restaurant meals
b. Draw a diagram that illustrates the tax revenue and deadweight loss from taxation of
[gasoline.
If the goal was to maximize government tax revenue, which item should be taxed?
|Why?
c.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe31b25eb-9f11-4c85-b6ec-20510e03eb99%2Faa1f6f23-7f0d-41bd-885c-fde25bc0b9cb%2F796pveg_processed.png&w=3840&q=75)
Transcribed Image Text:6. Governor Gavin Newsom wants to raise money. He has a choice of imposing an excise tax of
the same amount on one of two previously untaxed goods: restaurant meals or sales of gasoline.
Both the demand and the supply of restaurant meds are more elastic than the demand for and
the supply of gasoline. Do the following:
a. Draw a diagram that illustrates the tax revenue and deadweight loss from taxation of
restaurant meals
b. Draw a diagram that illustrates the tax revenue and deadweight loss from taxation of
[gasoline.
If the goal was to maximize government tax revenue, which item should be taxed?
|Why?
c.
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