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)

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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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6. The diagram below shows the market for chromebooks in the town of Smallville, U.S.A. Policy mak- ers want to collect money for more paper books in school and place a tax of 100 $ on chromebooks. Describe the impact of the tax on the market below. Price 500 450 400 350 300 250 200 150 100 50 100 200 300- Chromebooks 800 900 1,000 7. After the tax, 8. After the tax, consumers pay a price of . 9. After the tax, producers receive a price of 10. What amount of tax revenues are collected when the tax is instituted?. chromebooks are exchanged in the market.
8. U.S. government price supports for milk led to an unceasing surplus of milk. In an effort to reduce the surplus about a decade ago, Congress offered to pay dairy farmers to slaughter cows. Use two graphs, one for the milk market and one for the meat market, to illustrate how this policy should have affected the price of meat. (Assume that meat is sold in an unregulated market.) Be sure to draw the inverse demand and supply curves and label your axes. Explain clearly.
Effect of a tax on buyers and sellers The following graph shows the daily market for jeans. Suppose the government institutes a tax of $23.20 per pair. This places a wedge between the price buyers pay and the price sellers receive.
1. Consider the market for candy bars given below. Suppose that the government imposes a tax of $2 per candy bar in this market. Show on the graph and calculate the following: Price 5 $4.50 $4 $3.50 Supply 53 $2.50 $2 $1.50 $1 Demand S0.50 400 800 1200 1600 2000 2400 2800 3200 3600 4000 Candy Bars A. The quantity the market will produce with the tax. B. The government revenue from the tax. C. The deadweight loss from the tax. D. The consumer surplus with the tax. E. The producer surplus with the tax.
The following graph shows the weekly market for craft beer in some hypothetical economy. Suppose the government levies a tax of $40.60 per case. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dolars per case) 200 180 160 140 120 100 80 60 40 20 0 + Buyers Sellers Demand Before Tax After Tax Tax Wedge Supply 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Cases of craft beer) Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity Price Buyers Pay (Cases of craft beer) (Dollars per case) Price Sellers Receive (Dollars per case) Using your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Tax Burden (Dollars per case) Elasticity The tax burden…
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
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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)
Suppose the Canadian government has decided to place an excise tax of $20 per tire on producers of automobile tires Excise taxes are also called sales or commodity taxes 150 Previously, there was no excise tax on automobile tires. As 140 a result of the excise tax, producers of tires, such as 130 Bridgestone and Michelin, are going to alter their tire prices The graph illustrates the demand and supply curves for 120 Supply Demand 110 100 automobile tires before the excise tax. 90 Please shift the appropriate curve or curves on the graph to demonstrate the new equilibrium 80 70 What is the price consumers pay for a tire post tax? Round 60 to the nearest 10 50 0 2 4 5 6 7 8 9 10 Quantity of tires 100 price paid by consumers: Price per tire co
ols 4. The Laffer curve Government-imposed taxes cause reductions in the activity that is being taxed, which has important implications for revenue collections. To understand the effect of such a tax, consider the monthly market for champagne, which is shown on the following graph. 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. PRICE (Dollars per case) 22***RES 40 35 Show Transcribed Text AX REVENUE (Dolan) 018 27 345 54 63 72 81 00 QUANTITY (Cases) Suppose the government imposes a $10-per-case tax on suppliers. At this tax amount, the equilibrium quantity of champagne is [ . 648 576 504 432 360 204 3214 144 72 D Supply . Demand Now calculate the government's tax revenue if it sets a tax of $0, $10, $20, $25, $30, $40, or $50 per case. (Hint: To find the equilibrium quantity…
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…