3. Effect of a tax on buyers and sellersThe following graph shows the weekly market for handbags in some hypothetical economy.Suppose the government levies a tax of $29.20 per bag. The tax places a wedge between the pricebuyers pay and the price sellers receive.10081080gPRICE (Dollars per bag)868g810Before TaxTax WedgeAfter TaxDemand30 40 50 60 70QUANTITY (Bags of handbags)SupplyComplete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receivebefore and after the tax.80 90 100Quantity(Bags of handbags)IPrice Buyers Pay(Dollars per bag)Price Sellers Receive(Dollars per bag)

Answered: Image /qna-images/answer/786aecb3-bd34-47db-a781-bf3e2c567498.jpg

3. 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 $29.20 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. 100 8 8 P PRICE (Dollars per bag) 888 8 0 Before Tax Tax Wedge After Tax Demand 10 60 70 80 10 100 QUANTITY (Bags of handbags) Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Supply Quantity (Bags of handbags) I Price Buyers Pay (Dollars per bag) Price Sellers Receive (Dollars per bag)

3. 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 $29.20 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. 100 8 8 P PRICE (Dollars per bag) 888 8 0 Before Tax Tax Wedge After Tax Demand 10 60 70 80 10 100 QUANTITY (Bags of handbags) Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Supply Quantity (Bags of handbags) I Price Buyers Pay (Dollars per bag) Price Sellers Receive (Dollars per bag)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 11 Explain how do the tax incidence and deadweight loss of a commodity tax vary with the elasticities of demand and supply (you do NOT have to refer to the specific demand and supply in the exercise above. You have to discuss, in general, how the elasticities of demand and supply affects the tax incidence and deadweight loss. A BI EEP E
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…
5. Calculating tax incidence Suppose that the local government of Raleigh decides to institute a tax on soda producers. Before the tax, 25 million liters of soda were sold every month at a price of $11 per liter. After the tax, 19 million liters of soda are sold every month; consumers pay $16 per liter, and producers receive $7 per liter (after paying the tax). The amount of the tax on a liter of soda is 3 that falls on producers is 5 per liter. O True per liter. Of this amount, the burden that falls on consumers is 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. False per liter, and the burden
a) Under which circumstances does the tax burden fall entirely on consumers? Briefly explain.
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6) The following graph shows the effect of a per-ticket tax on plane tickets from Boston to Tampa. Use the graph to answer questions 5 to 10. O $10 $30 $40 Price (P) of airline tickets (in dollars per ticket) What is the amount of the tax per ticket from Boston to Tampa? $20 230 200 190 2850 3000 with tax D Sno tax Figure 14 Image author created Quantity (Q) of airline tickets (thousands per day)
4. In order to reduce farm output, raise farm prices, and thus raise farm incomes (revenues), the government pays farmers to set aside a portion of their land from production. Using a graph, explain in terms of the elasticity of demand for farm products why farmers may be better-off when harvests are low even if we ignore the money they receive from the set-aside program.
Question 36 For Questions 36-46, please refer to the following graph. The vertical distance between points A and B represents a per-unit tax in the market. tPrice 12 11 10 t. Supply H. G 4 3- 2- 1- Demand 0s 1 13 2 2s 3 33 4 45 s Deantit Without the tax, the equilibrium price in this market is $ , and the equilibrium quantity is units.
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