Price ofQuantity1. The U.S. government would like to help theAmerican auto industry compete against foreignQuantitysupplied ofimported trucks imported trucksimporteddemanded oftrucksautomakers that sell trucks in the United States.$32,000100400It can do this by imposing an excise tax on eachforeign truck sold in the United States. Thehypothetical pre-tax demand and supplyschedules for imported trucks are given in theaccompanying table.a. In the absence of government interference,what is the equilibrium price of an importedtruck? The equilibrium quantity? Illustrate with a diagram.b. Assume that the government imposes an excise tax of $3,000 per imported truck. Illustrate theeffect of this excise tax in your diagram from part a. How many imported trucks are nowpurchased and at what price? How much does the foreign automaker receive per truck?c. Calculate the government revenue raised by the excise tax in part b. Illustrate it on your diagram.d. How does the excise tax on imported trucks benefit American automakers? Whom does it hurt?How does inefficiency arise from this government policy?31,00020035030,00030030029,00040025028,00050020027,000600150

The U.S. government would like to help the American auto industry compete against foreign automakers that sell trucks in the United States. It can do this by imposing an excise tax on each foreign truck sold in the United States. The hypothetical pre-tax demand and supply schedules for imported trucks are given in the accompanying table. a. In the absence of government interference, what is the equilibrium price of an imported truck? The equilibrium quantity? Illustrate wit b. Assume that the government imposes an excis

The U.S. government would like to help the American auto industry compete against foreign automakers that sell trucks in the United States. It can do this by imposing an excise tax on each foreign truck sold in the United States. The hypothetical pre-tax demand and supply schedules for imported trucks are given in the accompanying table. a. In the absence of government interference, what is the equilibrium price of an imported truck? The equilibrium quantity? Illustrate wit b. Assume that the government imposes an excis

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 11E: Federal excise taxes on gasoline vary widely across the developed world. The United States has the...

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Federal excise taxes on gasoline vary widely across the developed world. The United States has the lowest taxes at USD $0.40 per gallon (or Â£0.07 per liter), Canada has taxes of $0.60 per gallon, Japan and much of Europe is $2.00 per gallon, while Britain has the highest tax at $2.83 a gallon or Â£0.5 per liter. If gasoline taxes are intended to reduce the time losses from road congestion in urban environments and gasoline pre-tax costs about Â£0.40 per liter, why might the optimal tax in Canada be 50 percent higher than in the United States? What would be an explanation for why adjacent countries would have such different estimates of the price elasticity of demand for auto driving?16
INCREASE IN TAX ON ALCOH OL AND TOBACCO Specific excise duty on alcohelle bever ges and tobacco products will increase by 8% INCREASES WIT MOUT BEER 14c per 340ml can UNFORTIFIED WNE 56e per 7 50mi bottle FORTIFIED WINE 44c per 750ml bottle SPARKLING WINE 86c per 750ml bottle APPLE BEER AND ALCOHOLIC FRUIT DRINKS 14c per 840ml can STRONG BEVERAGE/ORINKS RS,50 per 750ml bottle 1 Excise duty is also known as 2 In your opinion, do you think it was the right decision to increase excise taxes? Motivate your answer.
Considermarketforagoodcharacterizedbythefollowinginverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX.a. Compute the surplus received by consumers and producers.b. Now suppose all manufacturers of this good are to pay a lump tax of $0.10that will be used by the government regulators to defray some of the environmental cost imposed by this good’s production. What will be the new surplus received by consumers and producers?c. Based on your results in part ‘b’ above, how will you evaluate the impact of this tax policy on the society? Explain
After the pandemic, if the city of Pasadena increased sales tax by 1% to help pay for some of the economic recovery efforts, this would be considered a O Proportional tax O Headcount tax O Progressive tax O Regressive tax
O When a per unit tax is imposed on the consumer of the product, identify how the consumer nd producer surplus changes, identify the deadweight loss and the amount of the total tax that vill be received by the government. Price PTax D PE F E P1 I H. K Dmi DMTAX QE QE2 Quantity aibicid eifigoh Consumer Surplus before tax = Producer Surplus before tax Consumer Surplus after tax = a Producer Surplus after tax = dig Total Tax = Deadweight Loss = %3D a,bicifih 7 b.) If the world price level of a product was above the domestic U.S. equilibrium price, diagram if the U.S. would import or export the product? Identify how the consumer surplus and producer
Calculate the percentage of the tax borne by the demander and supplier in each of the following cases:Instructions: Enter your responses rounded to the nearest whole number. Elasticityof demand Elasticityof supply Percent borne by demander Percent borne by supplier a. ED = 0.1 ES = 0.5 % % b. ED = 1.0 ES = 2.0 % % c. ED = 1.3 ES = 0.9 % % d. ED = 1.9 ES = 0.7 % % e. Summarize your findings regarding relative elasticity and tax burden. Consumers bear a greater portion of the tax burden because consumers choose to buy the good. Whichever group (producers or consumers) has the lower elasticity bears the greater portion of the tax burden. Whichever group (producers or consumers) has the higher elasticity bears the greater portion of the tax burden. Producers usually bear a greater portion of the tax burden because the government generally levies more taxes on producers.
the verhcal dslama betwe evw paints A and C upusints a tax m Ku mankeT. lo0ok 900- 800 A 700 600t 500 400 300+ 200 + 100 40 100 110 10 20 What will the total loo0 to Heie broducers as a ruult taxes? a) 4000 b/500 o) Go0 d) 90 e) 12000 6000 18000
Figure & The vertical distance between peints A and B represents a tax in the market. Refer to Figure &. The munt of deadweight loss as a result of the tax is O $400 O $250 O $600 O $50. 82882288922 110 PRICE 100 Supply K Demand 610 15 20 25 10 QUANTITY 02
Supply fucntion: QS=200P-700 Demand function: Qd=3000-100p If a goverment want to reduce the quantity of units sold to 500, what is the price per unit tax?
A product has demand given by Q = 30 – 2P, where P here means buyer price of course. Supply is given by Q = P, where P is seller price here. First, with no tax in this market, find equilibrium price and quantity. Next, suppose that an excise tax of $3 is imposed on the sellers for each unitthey sell. In this case, determine the equilibrium buyer and seller prices and market quantity. How is the tax shared between buyers and sellers?
Opponents of increasing the tax on gasolineargue that the big oil companies just pass thetax along to the consumers. Do you agree ordisagree? Explain your answer.
20 10 -demand - uey with ta How much revenue will the government gain if they put a $6 tax on this product? Do not write the dollar symbol ($) because that confuses the computer. Write just a number. 16