3. It is frequently asserted that taxes on cigarettes and beer are regressive, because poor individuals spend a larger fraction of their income on such items than do better-off individuals. How would your estimate of the degree of regressivity be affected if you thought these commodities were produced by: a. Competitive industries with inelastic supply schedules? b. Monopoly with a linear demand schedule? c. Monopoly facing a constant elasticity demand schedule?

3. It is frequently asserted that taxes on cigarettes and beer are regressive, because poor individuals spend a larger fraction of their income on such items than do better-off individuals. How would your estimate of the degree of regressivity be affected if you thought these commodities were produced by: a. Competitive industries with inelastic supply schedules? b. Monopoly with a linear demand schedule? c. Monopoly facing a constant elasticity demand schedule?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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