VerdanaBIUA|= = ==|=|=、m、同1.2.14 17Energy drinks have been causing death.To discourage the energy drinks market, lawmakers, including Senator Miller (D-CA), have called foran aggressive tax on energy drinks. The Miller Bill would place a two dollar tax on energy drink tallcans (that on average cost $2.50) in all American markets. Other members of Congress led bySenator Cruz (R-TX), however, believed that tax to be too high, so the Miller Bill was amended todecrease the size of the tax to just one dollar.1. Draw a graph with demand curve, supply curve, equilibrium price and quantity, tax price, taxincidence, tax revenue, and deadweight loss. Sen. Cruz claims that this smaller tax stillaccomplishes the goal of destroying the market for energy drinks, while Sen. Millervehemently disagrees, stating that energy drinks will still be consumed, but to a lesser extent.Which senator is correct, and how can you tell from the graph?I1:229,

The equilibrium price is Pe and the corresponding equilibrium quantity is qe at the original demand…

1. Draw a graph with demand curve, supply curve, equilibrium price and quantity, tax price, tax incidence, tax revenue, and deadweight loss. Sen. Cruz claims that this smaller tax still accomplishes the goal of destroying the market for energy drinks, while Sen. Miller vehemently disagrees, stating that energy drinks will still be consumed, but to a lesser extent. Which senator is correct, and how can you tell from the graph?

1. Draw a graph with demand curve, supply curve, equilibrium price and quantity, tax price, tax incidence, tax revenue, and deadweight loss. Sen. Cruz claims that this smaller tax still accomplishes the goal of destroying the market for energy drinks, while Sen. Miller vehemently disagrees, stating that energy drinks will still be consumed, but to a lesser extent. Which senator is correct, and how can you tell from the graph?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

"""eco-nomics""
question attached! (: Thank you!
4. Effect of a tax on buyers and sellers The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $40.60 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per bag) 200 180 160 140 120 100 80 60 40 20 0 Demand 0 50 Tax Wedge Supply ++ 100 150 200 250 300 350 QUANTITY (Baas of handbags) 400 450 500 ?
Question 3 - Taxation Suppose the federal government requires beer drinkers to pay a $2 tax on each case of beer purchased. (a) Draw a supply-and-demand diagram of the market for beer without the tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers? (b) Now draw a supply-and-demand diagram for the beer market with the tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers? Has the quantity of beer sold increased or decreased? (c) Can you identify any government revenues? (d) Is there any inefficiency, and if so, can you define it and label it on the graph?
A subsidy is the opposite of a tax. With a $0.50 tax on the buyers of ice-cream cones, the government collects $0.50 for each cone purchased; with a $0.50 subsidy for the buyers of ice-cream cones, the government pays buyers $0.50 for each cone purchased. Show the effect of a $0.50 per cone subsidy on the demand curve for ice-cream cones, the effective price paid by consumers, the effective price received by sellers, and the quantity of cones sold. Do consumers gain or lose from this policy? Do producers gain or lose? Does the government gain or lose? A subsidy is the opposite of a tax. With a $0.50 tax on the buyers of ice-cream cones, the government collects $0.50 for each cone purchased; with a $0.50 subsidy for the buyers of ice-cream cones, the government pays buyers $0.50 for each cone purchased. Show the effect of a $0.50 per cone subsidy on the demand curve for ice-cream cones, the effective price paid by consumers, the effective price received by sellers, and the quantity…
9. Effect of a tax on buyers and sellers 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. 200 PRICE (Dollars per bottle) 160 Supply 140 120 100 14 80 Demand 60 40 20 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Bottles of wine) 180 0 Before Tax After Tax Graph Input Tool…
1. What is the equilibrium price and quantity? 2. Suppose the government imposes a tax of $1.00 on each water bottle. Complete the column showing quantity supplied after the tax. (Hint: at a price of $8.00 the quantity supplied was 36000. With the tax, this quantity supplied will be supplied only at a price of $9.00, so the Quantity supplied with a tax at 9.00 is 36000) You continue, so at $8.50, the producer only gets 7.50. so is only willing to offer 32000 units. Qd Price 000s) $9.00 20 8.50 8.00 7.50 7.00 6.50 6.00 24 28 32 36 40 44 Qs (000s) 44 40 38 32 28 24 20 Quantity supplied after tax Qs(t) (000s) 36 32 Price 28 24 3. On your graph, plot the new supply curve after the imposition of the tax (in a different colour, to differentiate the supply curve). 4. What will be the new equilibrium price and quantity? 5. How much of the tax is passed onto the consumers in the form of price increase, and how much is paid by the producers? Indicate the producer and consumer burden on your…
Suppose that the local government of Santa Fe decides to institute a tax on soda consumers. Before the tax, 45,000 liters of soda were sold every week at a price of $10 per liter. After the tax, 38,000 liters of soda are sold every week; consumers pay $14 per liter (including the tax), and producers receive $8 per liter. The amount of the tax on a liter of soda is 3 that falls on producers is 5 per liter. True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. True per liter. Of this amount, the burden that falls on consumers is 3 O False per liter, and the burden
Question 14 In the long run, both supply and demand tend to become more elastic. This suggests that, in the long run, the government will likely reduce tax rates. deadweight loss from a tax will be less than it is in the short run. deadweight loss from a tax will be greater than it is in the short run. deadweight loss from a tax will be zero. O revenue generated from the tax will increase.
Question 5 Suppose that the government imposes a tax on cigarettes. Use the diagram below to answer the questions. D is the demand curve before tax, S is the supply curve before tax and St is the supply curve after the tax. Price 18 12 10 10 12 Qua (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 price Seller's reservation price Choose. + Choose. + Choose. Price paid by consumers Choose. + 12 18 Quantity of cigarettes sold Choose. 10 7 Buyer's reservation price 3 Choose. 8 Price paid by producers Choose.
Suppose a local government votes to impose an excise tax of $0.90 per bottle on the sales of bottled water. (Assume that all bottles are identical and residents cannot shop elsewhere.) Before the tax the equilibrium price and quantity are $1.20 and 2000 bottles per day. After the tax is imposed, market equilibrium adjusts to a price of $1.70 and quantity of 1300 bottles per day. a. Draw the supply and demand diagram before and after the excise tax is imposed. 1.) Using the line drawing tool, plot the original and new supply curves and label the lines properly. 2.) Using the point drawing tool, indicate the original and new equilibrium points and label these points properly. Carefully follow the instructions above, and only draw the required objects. Price ($ per bottle) 3.00 2.80- 2.60- 2.40- 2.20- 2.00- 1.80- 1.60- 1.40- 1.20- 1.00- 0.80- 0.60- 0.40- 0.20- 0.00+ 0 1000 2000 Quantity (bottles per day) 10 3000
Question 22r