QUESTION ONEThe diagram below shows demand and supply curves for good K; where Do and Soare the initial demand and supply curves, respectively. A tax is levied on each unit ofthe good sold.Use the information provided in the diagram to answer the questions that follow.PriceS1GH¢ 3.10soGH¢ 2.70GH¢ 2.00Do9 Quantity demanded and supplied7i. Find the equilibrium price and quantity demanded and supplied before the tax.ii. Which of the curves incorporates the tax? Explain your answer.ii. Suppose the producer is successful to transfer the entire tax to the consumer.What is the market price due to the tax?iv. Find the per unit tax levied.

We will answer only the first three parts, as no question number is mentioned here.

i. Find the equilibrium price and quantity demanded and supplied before the tax. ii. Which of the curves incorporates the tax? Explain your answer. iii. Suppose the producer is successful to transfer the entire tax to the consumer. What is the market price due to the tax?

i. Find the equilibrium price and quantity demanded and supplied before the tax. ii. Which of the curves incorporates the tax? Explain your answer. iii. Suppose the producer is successful to transfer the entire tax to the consumer. What is the market price due to the tax?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter4: Demand, Supply, And Market Equilibrium

Section: Chapter Questions

Problem 24P

See similar textbooks

Related questions

Q: What happens to the market equilibrium price and output when tax is imposed on the buyers? Is the…

A: Taxation refers to the compulsory charge imposed by the government on the users of certain goods,…

Q: Seeing a golden opportunity to increase its revenue, assume the City of Boston has decided to levy a…

A: When a tax is imposed on every unit of quantity sold, then the tax burden is shared by the seller…

Q: There is equilibrium in the relevant market. The economic effects of taxes can be analysed using…

A: We are going to discuss the tax effect on equilibrium price to answer this question.

Q: omplete the following table with the tax revenue collected and deadweight loss caused by each of the…

A: Total revenue is the total receipts from sales of a given quantity of products or services. It is…

Q: ppose that the government imposes a tax on cigarettes. Use the diagram below to answer the…

A: When the government Imposes tax it directly increases the Revenue of the government and the burden…

Q: c. Now consider a market for housing. Suppose a city has 1,000 residents, each resident has a demand…

A: Given : Qd = 50 - p Qs = 1000

Q: Draw a well labeled graph showing the impact of the tax. On whom does the tax burden fall--the teams…

A: The supply of tickets is 38,000. So in the below diagram, a tax amount which is paid by the…

Q: hen demand is elastic Draw a diagram and explain how consumer burden is determined…

A: The tax burden is distributed between the buyer and seller based on the prevailing elasticities of…

Q: tax

A: The tax is the amount which government charges on their income or on through different items. The…

Q: A tax is placed on beer and sellers have ended up bearing most of the burden of this tax. Why is…

A: When a tax is placed on the good, quantity exchanged in the market decreases. Buyers pay higher…

Q: A tax on demand shifts and the burden of the tax falls on the demand curve only; on demanders only.…

A: A tax on demand implies a tax on goods which leads to a fall in the demand and supply so it shifts…

Q: Suppose that the government has been supporting the price of corn. Its free market price is $2.50…

A: Price floor or support price is introduced by the govt. when govt. sets minimum price level at which…

Q: a subsidy is the opposite of a tax. with a $500 tax on the buyers of laptops, the government…

A: As government provides subsidy of $500 to the buyers, the demand curve shifts to the right from D to…

Q: What would be the effect of a decrease in government taxes on a good's supply curve, ceteris…

A: Answer: A decrease in tax will lead to a decrease in the cost of production. As a result, the supply…

Q: Due to imposing a sugar tax, who would likely suffer a greater share of the deadweight loss – the…

A: Taxes are unintended fees placed on individuals or companies and levied by a government agency –…

Q: The market for piano lessons is as follows: Demand: Q = 80 – 2P Supply: Q = 3P Draw the supply…

A: Solution A Here O is Equilibrium point Solving Q and P Q= 80-2P = 3P 5P=80…

Q: Assume the government imposes a $2.00 tax on a good that costs $5.00. If the price buyers pay…

A: Burden of tax refers to those who essentially end up paying the tax.

Q: A government decides to reduce air pollution by reducing the use of petrol and imposes a specific…

Q: Daniel and Jacob like soda drinks. Jacob's demand for soda is: P=10-Q; the demand for Daniel is…

A: Demand and supply forces in the market interact to give the market equilibrium condition. A tax…

Q: The figure below shows a market of good X. Suppose that the government levied the tax of 30 on X.…

A: The given figure shows the demand and supply curve. The equilibrium price and quantity is given at…

Q: Draw the supply curve, demand curve and solve for equilibrium (tax free) price and quantity. Solve…

Q: If the government decide to increase taxes on sugar, who do you think will carry the burden of…

A: The equilibrium price and quantity of a good or service is determined by the forces of market demand…

Q: How does a tax on a good affect the price paid by buyers, price receive by sellers, and the quantity…

A: Tax is a term that defines a charge imposed by the ruling authority, that is government, on market…

Q: A tax A) places a wedge between the price paid by the buyers and the price received by the sellers.…

A: Whether the tax is imposed on buyers or sellers, the effect of the tax is same. It leads to…

Q: The figure below shows that the imposition of an indirect tax shifts the supply curve to the left.…

A: Tax Revenue is the revenue earned by the government by the impositional of taxes. TR=t*Q TR=Tax…

Q: To raise money for a new student union, the Student Snack 2.25 Bar charges a tax of $0.75 on each…

A: The equilibrium in the market is obtained at the intersection of the demand curve and the supply…

Q: How does a tax on a good affect the price paid bybuyers, the price received by sellers, and the…

A: A tax is a monetary charge that is applied to a good or service. The tax will have the effect of…

Q: Suppose that the government imposes a tax on cigarettes. Use the diagram below to answer the…

A: Here, it is given that the government imposes tax on cigrette that shifts the supply curve to the…

Q: Explain the concepts of consumers' surplus and producers' surplus. Why in a competitive market…

A: Explain the concepts of consumers' surplus and producers' surplus. Why in a competitive market…

Q: Price (dollars per pie) 5 4 2 2 4 5 6 Quantity (thousands of pies per week) The demand for apple…

A: Demand is perfectly elastic when a small change in price can cause an infinite change in quantity…

Q: Suppose that the government imposes a tax on cigarettes. Use the diagram below to answer the…

A: Equilibrium is achieved at the output level where Qs equals Qd.

Q: The market for pizza is characterized by a downward sloping demand curve and an upward sloping…

A: An excise tax is a tax on each unit of a commodity. When it is collected from sellers, the tax…

Q: . Suppose the federal government requires beer drinkers to pay a $2 tax on each case of beer…

A: Microeconomics:- refers to the branch of economics that studies the behavior of individuals and…

Q: Suppose that the government imposes a tax on cigarettes. Use the diagram below to answer the…

A: In the above problem, the tax is imposed on cigarettes will eventually increase the cost of…

Q: Refer to Figure 6-9. The equilibrium price in the market before the tax is imposed is $1. $2.

A: The equilibrium price is intersection between Demand and Supply. There are two equilibrium in the…

Q: Draw a supply-and-demand diagram of the market for beer without the tax. Show the price paid by…

A: Equilibrium is attained in the market where the demand and supply intersect each other.

Q: Demand of product X = 2 P = 2000 - 4 Q Supply of product X = P = 100 + 3 Q Sales tax per unit = $…

A: "Since you have posted a question with multiple sub-parts, we will solve the first three subparts…

Q: When the government places a tax on the producer of a good or service both the supply and demand…

A: Option D is correct The supply curve for the good or service shifts to the left.

Q: If a new excise tax (a tax on the seller) is imposed on steak, Select one: a. market price of steak…

A: Excise tax is a tax on sellers and is paid by sellers.

Q: Suppose that the government imposes a tax on cigarettes. Use the diagram below to answer the…

A: The equilbrium price and quantity of a good sold in a market are determined by the forces of demand…

Q: Suppose the government removes a tax on buyers of a good and levies a tax of the same size on…

A: When the tax is imposed by the government, it is shared by buyers and sellers regardless of whether…

Q: New York has the highest cigarette taxes in the country. The price of an average pack of cigarettes…

Q: In a market where the supply curve is perfectly inelastic,how does an excise tax affect the price…

A: When the government imposes a per-unit tax on a good then both buyers and sellers of the good share…

Q: A subsidy is the opposite of a tax. With a €0.50 tax on the buyers of ice cream cornets, the…

A: A subsidy is a benefit being given usually by the government to a business, an individual or an…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

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

In a market where the supply curve is perfectly inelastic how does an excise tax affect the price paid by consumers and the quantity bought and sold?
What is consumer surplus? How is it illustrated on a demand and supply diagram?
What is the effect of a price ceiling on the quantity demanded of the product? What is the effect of a price ceiling on the quantity supplied? Why exactly does a price ceiling cause a shortage?
How can you locate the equilibrium point on a demand and supply graph?
How does a price floor 521 above the equilibrium level affect quantity demanded and quantity1 supplied?
Suppose there is a soda tax to curb obesity. What should a reduction in the soda tax do to the supply of sodas and to the equilibrium price and quantity? Canyon show this graphically? Hint: Assume that the soda tax is collected from the sellers.
1. Assume that the demand for cigarettes is Qd=1600-30P and the supply of cigarettes is Qs=1400+70P: a. Calculate the equilibrium price and quantity and show them on a supplyand demand diagram. b. Suppose the government levies a $2 tax for each unit of cigarettes sold.Draw this on the diagram and calculate the new equilibrium price andquantity. c. Calculate the price elasticity of demand given these two price andquantity points. Is the demand for cigarettes price elastic or inelastic onthis part of the demand curve? Interpret the elasticity in words (i.e. If theprices rises by 10%, by what percentage will consumption fall?) d. On a graph, identify the tax revenue generated by this tax. e. Indicate each area on the graph with a letter and show in a table theconsumer surplus and the producer surplus before and after the tax. Also,indicate the deadweight loss associated with this tax. f. If your policy advisor boss wanted you to provide him/her witharguments in favor of this cigarette…
1. Consider the following figure to answer the following four questions. (Please note that the numbers on the vertical axis are 0, 5, 10, 15, 20, 25, and 30 and on the horizontal axis are 0, 10, 20, 30, 40, 50, and 60.) Excess Supply and Demand ww 1 54000 $25.00 530.00 $15.00 $100 30.00 Excess Supply B C Excess Demand D 1A. What is the price level at C and D? 1B. What is amount of excess demand between C and D at that price level? (Assume that at D the number is half way between 20 and 30 on the horizontal axis). (Show your math works.) 1C. What is the price level at A and B? ID. What is the amount of excess supply at that price level? (Assume that the quantities represented by A and C and between B and D are same) (Show your math works.)
8. Use the following graph to answer this question. ↑price S aftertax 7. 65 6 55 45 4 35 25 15 1 D 05 10 15 20 25 30 35 40 45 50 55 60 65 70 quantity As the figure is The equilibrium price in the market before the tax is imposed is drawn, are responsible for sending the tax payment to the government. and the effective price The price paid by buyers after the tax is imposed is sellers receive after the tax is imposed is The amount of the tax per unit is tax per unit and sellers pay Buyers pay of the of the tax per unit. The total tax revenue that the tax generates for the government is
1. How imposition of some tax on goods will affectlabor supply
Market researches have studied the market for milk,and their estimates for the supply of and the demand for milk per month are as follows:a.Using the data,graph the demand for and the supply for milk.Identify the equilibrium point as E,and use dotted lines to connect E to the equilibrium price onthe price axis and the equilibrium quantity on the quantity axis.b.Suppose the government enacts amilk price support of $8per gallon.Indicate this action on your graph,and explain the effect on the milk market?Why would the government establish such a price support?c.Now assume the government decides to set a price ceiling of $4 dollar per gallon.Show and explain how this legal price effects your graph of the milk market.What objective could the government be trying to achieve by establishing such a price ceiling?
QUESTION 13 Price Quantity Demanded Quantity Supplied 10 2 million 20 million 16 12 19864 9 5 4 6 MEIFFTIATIE 10 12 4 0 The chart above provides the demand & supply schedules for yoga mats in California. Suppose that a price ceiling of $6 is implemented. Which of the following is not true? OA. There is a shortage in the market. OB. The market is in equilibrium since everyone who wants it is getting to purchase it. OC. The price ceiling is binding OD. There may be some inefficiency due to this price control.