13. "We should impose a 20 percent luxury tax on expensiveautomobiles (those with a sales price of $75,000 or more)in order to collect more tax revenue from the wealthy." Willthe burden of the proposed tax fall primarily on the wealthy?Why or why not?

Step 1: Answer: Imposing a 20 percent luxury tax on expensive automobiles, particularly those with a…

Answered: 13. "We should impose a 20 percent…

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Costs Of Taxation

Section: Chapter Questions

Problem 4PA

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5. Calculating tax incidence Suppose that the local government of Santa Fe decides to institute a tax on seltzer consumers. Before the tax, 20,000 packs of seltzer were sold ever week at a price of $11 per pack. After the tax, 14,000 packs of seltzer are sold every week; consumers pay $14 per pack (including the tax), and producers receive $7 per pack. The amount of the tax on a pack of seltzer is $ burden that falls on producers is $ O True per pack. 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. False per pack. Of this amount, the burden that falls on consumers is $ per pack, and the
5. Calculating tax incidence Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 10,000 cases of cola were sold every week at a price of $4 per case. After the tax, 4,000 cases of cola are sold every week; consumers pay $7 per case, and producers receive $1 per case (after paying the tax).
Both a payroll tax and an excise tax on alcoholraise revenue and, respectively, shrink the marketsfor labor and alcohol. Although both have somefunctions in common, governments may havedifferent goals when levying them. What goalsdo you think motivate a payroll tax? What goalsmotivate an alcohol tax?
5. Calculating tax incidence Suppose that the Canadian government decides to charge cola consumers a per-unit tax (a tax on each unit purchased). Before the tax, 30 million cases of cola were sold every month at a price of $6 per case. After the tax, 23 million cases of cola are sold every month; consumers pay $9 per case (including the tax), and producers receive $4 per case. The amount of the tax on a case of cola is S burden that falls on producers is $ True per case. True or False: The effect of the tax on the quantity sold would have been larger if the tax had been levied on producers. False per case. Of this amount, the burden that falls on consumers is $ per case, and the
Comcast has a cable monopoly. The following graph shows the demand, MR, and MC curve of Comcast. Use the graph to answer questions 3 to 8. Price (P) and Costs (in dollars per subscription) $25 $22 $21 $20 $19 0 5 6.5 MC 7 MR ATC Q (Number of subscriptions in millions per month)
HELP ME WITH PART B PLEASE BY SHOWING IN A DIAGRAM a. The elasticity of demand for beer in country A is 1.8 and the elasticity ofdemand for beer in country B is 1.7. Suppose that the supply of beer isthe same in both countries and that both countries impose the same levelof tax on beer. Does the consumer in country A share more burden of tax?b. ii. Suppose the demand curve for sugar is Q = 60 − 3P and the supply curveis Q = 2P. Suppose the government announces a per-unit tax of 1 on theprice of sugar. What is the deadweight loss from the tax?
18. The U.S. Senate is considering a bill that would tax the sale of laptop computers in order to fund a computer educa- tion program for presidential hopefuls. The Congressional Budget Office (CBO) estimates that if it implements a low tax of $12 per laptop, revenue should be sufficient to exactly fund the program. The CBO also estimates that a high tax of $230 per laptop will exactly fund the program. a. How can a low tax and a high tax raise exactly enough money to fund the program? Illustrate your answer using a graph. b. Suppose that you are an economic advisor to the Senate Finance Committee, tasked with analyzing the economic impact of the tax proposals. Which proposal do you recommend, and why?
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5. Calculating tax incidence Suppose that the local government of Jacksonville decides to institute a tax on seltzer producers. Before the tax, 15 billion packs of seltzer were sold every year at a price of $9 per pack. After the tax, 9 billion packs of seltzer are sold every year; consumers pay $12 per pack, and producers receive $4 per pack (after paying the tax). The amount of the tax on a pack of seltzer is $ burden that falls on producers is $ per pack. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers. O True per pack. Of this amount, the burden that falls on consumers is $ O False per pack, and the
The demand for cigarettes, which create negativeexternalities through secondhand smoke, is oftenrelatively inelastic. That is, when the price of cigarettes changes, the quantity demanded changes bya smaller portion. Using this fact, explain to whatextent you think a tax on cigarettes would fulfilleach of the goals of taxation.
5. Calculating tax incidence Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 30,000 cases of cola were sold every week at a price of $4 per case. After the tax, 25,000 cases of cola are sold every week; consumers pay $6 per case, and producers receive $3 per case (after paying the tax). The amount of the tax on a case of cola is $ per case. Of this amount, the burden that falls on consumers is $ per case, and the burden that falls on producers is $ per case. 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 consumers. True O False

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13. "We should impose a 20 percent luxury tax on expensive automobiles (those with a sales price of $75,000 or more) in order to collect more tax revenue from the wealthy." Will the burden of the proposed tax fall primarily on the wealthy? Why or why not?