Question 5Suppose that the government imposes a tax on cigarettes. Use the diagram below to answer the questions. D is the demand curve before tax, Sis the supply curve before tax and St is the supply curve after the tax.Price18121010 12Qua(a) For the market for cigarettes without the tax. Indicate:Price paid by consumers(1)Price paid by producers(ii)Quantity of cigarettes sold(iv)Buyer's reservation price(v)Seller's reservation priceSeller's reservation priceChoose. +Choose. +Choose.Price paid by consumersChoose. +1218Quantity of cigarettes soldChoose.107Buyer's reservation price3Choose.8Price paid by producersChoose.

In any market, equilibrium corresponds to demand for the good or service being equal to supply of…

Answered: ose that the government imposes a tax…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 10PA

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Similar questions

Under which circumstances does line tax burden fall entirely on consumers?
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?
Exit A 5 tax on sugar-sweetened beverages currently generates $400,000 in revenue per day. If the tax increases to 8%, the revenue the tax generates will drop to $370,000. This tells us that in this range of tax rates, the effect outweighs the effect. Multiple Choice quantity, price O quantity, Income price; quantity price, Income
Follow up question regarding elasticities and taxes.
When airfares between Santa Rosa and Los Angeles averages $69, the quantity consumed is 42,500 tickets. One day, an airline tax is levied equal to $10.00 and output falls to 37,000 tickets. Assume that air travelers end up paying 75% of the tax. Calculate the price elasticity of demand and & interpret coefficient. Use the general formula, not the mid point formula Calculate the price elasticity of supply and interpret coefficient. Use the general formula, not the mid point formula. How do total sales in the airline market before and after the tax support your answer in (n) and/or (o)?
When airfares between Santa Rosa and Los Angeles averages $69, the quantity consumed is 42,500 tickets. One day, an airline tax is levied equal to $10.00 and output falls to 37,000 tickets. Assume that air travelers end up paying 75% of the tax. Total taxes paid by air travelers will be ____ Total taxes paid by airlines will be ____ Calculate the price elasticity of demand and & interpret coefficient. Use the general formula, not the mid point formula Calculate the price elasticity of supply and interpret coefficient. Use the general formula, not the mid point formula. How do total sales in the airline market before and after the tax support your answer in (n) and/or (o)?
11.) In the market for cars, the price elasticity of supply is +1.5, and the price elasticity ofdemand is -0.8. The equilibrium price is $ 30 thousand, and quantity is 120 million.(a) Assuming supply and demand are linear, reconstruct and draw the supply and demandcurves. Label the intercepts.(b) To reduce traffic, the government imposes a $400 tax on cars. What are PB and PS after thetax? What is the new equilibrium quantity? Illustrate them on the same graph.(c) How big is the change in consumer surplus, producer surplus, government revenue, anddeadweight loss?
The market supply and demand for a product are shown in the diagram below. PRICE $6 Supply Demand 80 200 QUANTITY (a) Is the price elasticity of supply less than one, equal to one, or greater than one? Explain. (b) Calculate consumer surplus at the equilibrium price. Show your work. (C) Now suppose the government imposes a per-unit tax of $1 on producers. (i) What happens to total revenue received by producers after they pay the tax to the government? Explain. (ii) Will producer surplus increase, decrease, or stay the same? (iii) Will total surplus increase, decrease, or stay the same? Explain.
what will happen to the equilibrium of mobile phones of government announces higher sales taxes on mobile phones?
3.3. KindOfBlue jeans. Two years ago, KindOfBlue jeans were priced at $72 and 121,000 units were sold. Last year, the price was lowered to $68 and sales increased to 132,000. (a) Estimate the value of the demand elasticity. (b) Based on your estimate of the demand elasticity, how many units would you expect to be sold if price were lowered by an additional $1? (c) In order to increase profits, should price be lowered below $68? If your answer begins — as it should! — with “it depends,” indicate as clearly as possible what additional information you would need and how you would base your answer on such additional information.
Figure 6-33 The diagram shows the effect of a tax as measured by the distance between) and K. Price 100 Refer to Figure 6-33. Bund upon the diagram the incidence of the tas falls more heavily on buyers. the incidence of the tax falls more heavily on sellers the incidence of the tax is shared equally by both buyers and sellers the incidence of the tax cannot be determined based upon the information in the diagram
1. Discuss the impact of the imposition of a tax (on the seller). What happens to the following? Price paid by the buyer Price received by the seller Quantity of the good sold Consumer surplus Producer surplus Total surplus 2. Is the impact different if the tax is placed on the buyer? 3. How does elasticity impact the incidence of a tax?

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