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 Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Cost Of Taxation

Section: Chapter Questions

Problem 4PA

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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?
2
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.
TO - Now suppose that the Demand curve is actually slightly more inelastic, and the Supply curve is actually much more elastic than in the previous graphs, as shown in the following figure. Notice that a $2/latte tax is still implemented. Venti Pumpkin Spice Lattes P $7.50 $6.50 in $5 $4.50 $4.25 $4 $3 4 10 14. What price will Consumers now have to pay for a PSL?: Pº = $ 15. What price will Producers now receive for a PSL, after the tax?: PP = $- 16. How many PSLS will now be sold?: Q Lattes 17. How much Consumer Surplus is created in this market?: CS = $- 18. How much Producer Surplus is created in this market?: PS = $- 19. How much Tax Revenue does the government receive in this market?: TAXREV = $. 20. How much Dead Weight Loss is created in this market?: DWL= $.
2
Suppose the demand curve for a good is highly elastic and the supply curve is highly inelastic. If the government taxes this good, O buyers and sellers will each share 50 percent of the burden, regardless of the elasticities of the demand and supply curves. sellers will bear a larger share of the tax burden. the distribution of the burden will depend upon whether the buyers or the sellers are required to send the tax to the government. buyers will bear a larger share of the tax burden.
Suppose the government places a tax on a product. How does the cost of the tax compare with the revenue raised? The cost of the tax to buyers and sellers is less than the revenue raised from the tax by the government. O Without additional information, such as the elasticity of demand for this product, it is impossible to compare tax cost with tax revenue. The loss of surplus to buyers and sellers exceeds the revenue raised from the tax by the government. The cost of the tax to buyers and sellers equals the revenue raised from the tax by the government.
If the government imposes a tax on a product: O the MC will rise causing the level of output to rise. the MC will rise causing the level of output to fall. O the MC will rise causing the level of output to rise. O None of these answers are correct. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accurate.

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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?