The following graph shows the daily market for wine when the tax on sellers is set at $0 per bottle.Suppose the government institutes a tax of $40.60 per bottle, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the taxin the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Taxon Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.)Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.Note: Once you enter a value in a white field, the graph and any corresponding amountseach grey field will change accordingly.Graph Input ToolMarket for Wine200190of wine)100Supply160Demand Price(Dollars per bottle)Supply Price(Dollars per bottle)132.000.00140a 120Supply Shifter100Tax on Sellers(Dollars per bottle)0.0080Demand8 604020100 200 300 400 500 600 700 800 900 1000QUANTITY (Bottles of wine)PRICE (Dollars per bottle) Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.QuantityPrice Buyers PayPrice Sellers Receive(Bottles of wine)(Dollars per bottle)(Dollars per bottle)Before TaxAfter TaxUsing the data you entered in the previous table, calculate the tax burden that falls on buyers and sellers, respectively, and calculate the priceelasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table.Tax Burden(Dollars per bottle)ElasticityBuyersSellersThe burden of the tax falls more heavily on theelastic side of the market.

When the government imposed the taxes, the price that the buyer pays must be more than the price…

The following graph shows the daily market for wine when the tax on sellers is set at $0 per bottle. Suppose the government institutes a tax of $40.60 per bottle, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.

The following graph shows the daily market for wine when the tax on sellers is set at $0 per bottle. Suppose the government institutes a tax of $40.60 per bottle, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter4: Markets In Action

Section: Chapter Questions

Problem 14SQ

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The table shows the quantities of beer supplied and demanded (in millions of six packs) at different prices ($ per six pack) in an unregulated market with no tax. Suppose a tax of $5 per six pack is collected from sellers of beer. Assume that the demand curve and the supply curve are straight lines. Quantity supplied Quantity demanded Price $4 28 $8 24 24 $12 40 20 With the tax in effect: The equilibrium price of beer is $ per pack (enter a whole number, example: 10) The equilibrium quantity of beer is million packs (enter a whole number, example: 10) The buyers' share of the tax is $ A per pack (enter a whole number, example: 10) The sellers' share of the tax is $ per pack (enter a whole number. example: 10)
Is thinking about levying a per-unit tax of $60 on firms supplying either ski passes or subway tickets. The supply curves for both of the two goods are identical, as given by the following graphs. The demand for ski passes is given by De (on the first graph), and the demand for subway tickets is given by Dr (on the second graph). Suppose the government decides to tax ski passes. The following graph plots the yearly demand and supply for this good. It also plots another supply curve (S+ Tax) shifted upward by the proposed tax amount ($60 per pass). On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for ski passes. Then use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax. PRICE (Dollars per pass) 2 8 2 2 2 2 2 2 2 2 20 120 110 100 90 60 40 30 20 10 4 Ski Passes Market S+Tax Supply De 0 50 100 150 200 250 300 350 400 450 500 550 600 Tax Revenue Deadweight Loss
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Daniel Patrick Moynihan, the late senator from New York, once introduced a bill that would levy a 10,000 percent tax on certain hollow-tipped bullets. A 10,000 percent tax on bullet ___ is not/is___ likely to generate a lot of revenue. Why might Senator Moynihan have proposed it? To boost the manufacturing industry of hollow-tipped bulletsTo raise revenue to support law enforcementTo discourage the use of hollow-tipped bullets
How a tax burden is divided between consumers and producers is called tax incidence. Consumers bear most of the tax burden when:
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Suppose the price elasticity of demand for smartphones is 0.5 (absolute value), while the price elasticity of supply is 1.9. If the government imposes a per-unit tax of $100 on the sellers of smartphones, how will the price and quantity transacted of smartphones change? Will the sellers or the buyers bear a larger tax burden? Will the market be able to achieve economic efficiency after the tax is imposed? Explain with a diagram.
The following graph represents the demand and supply for pinckneys (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. PRICE (Dollars per pinckney) 37.50- 30.00 22.50 Demand Result Per-unit A B D с E 2.5 Supply QUANTITY (Pinckneys) Complete the following table, given the information presented on the graph. Equilibrium quantity after tax Price producers receive before tax $ Value ?