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 per case. Of this amount, the burden that falls on consumers is $ burden that falls on producers is $ 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. True False per case, and the

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 per case. Of this amount, the burden that falls on consumers is $ burden that falls on producers is $ 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. True False per case, and the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The Government of your country wants to discourage the frequent use of alcoholic beverages, in this attempt they decided to impose a tax on every alcoholic drink at the point of sale. What is the effect of this tax on the price and quantity of alcoholic beverages consumed? Select one: O . Both the price and the quantity would rise. O b. The price would rise and the quantity would fall. Oc. Both the price and the quantity would fall. Od. The price would fall and the quantity would rise.
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This question tests your understanding of Application 1 in this chapter: New Zealand's tax on light spirits. How does a tax on one good affect the demand for substitute goods? The government imposed a special tax on light spirits (those with alcoholic content between 14 and 24%), nearly doubling the price of teens' favorite beverages, from $8 to $14. How did teenagers in New Zealand respond to the special tax on their favorite alcoholic beverage? O Teens significantly reduced drinking because of the tax. O The tax increased the bang per buck of light spirits. O Producers responded by increasing the alcohol content and offered more potent beverages below the prices of the original light beverages to avoid the tax. O As predicted by the equimarginal rule, the tax caused many teens to reduce their consumption of these beverages, often switching to other super light beverages or high alcohol content beverages.
Refer to image. Suppose the government imposes a tax of $0.60 per soft drink purchased. The price paid by the consumer becomes A. $2.40 B. $2.00 C. $2.20 D. $2.60 E. $1.80
7. Effect of a tax on buyers and sellers 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 (Dollars per case) 200 100 140 140 120 400 40 411 20 11 Demand 40 20 Tax Wedge Supply 20 30 411 30 4 19 NO QUANTITY (Cases of craft beer) 100
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.
3. In the market for Samsung Galaxy S22, the demand function is Q = 200 - 2P, while the supply function is Q = 2P - 20, where P denotes the price, and Q the quantity of Samsung Galaxy S22. a. Calculate the equilibrium price and quantity! b. To reduce addiction to social media, the government imposes a specific tax of $5 on sellers. Calculate the new equilibrium price and quantity c. Now suppose the tax of $5 is imposed on buyers rather than sellers. Find the new equilibrium price and quantity.
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.
7. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes. Suppose the government institutes a tax of $11.60 per pair. This places a wedge between the price buyers pay and the price sellers receive.
3. The graph shows the effect of a tax imposed on soft drinks. Use this graph to answer the questions. S2 Amount of Тах A P2 P, B C: D E F H D1 Quantity of soft drinks a. Which areas in the graph represent the deadweight loss? b. Which areas in the graph represent the consumer surplus? c. Which areas in the graph represent the producer surplus? d. Which areas in the graph represent the change in consumer surplus? e. Which areas in the graph represent the change in producer surplus? f. Which areas represent the revenues collected by the government from the tax? Price (dollars)
The market supply and demand for a product are shown in the diagram below. Now supose the government imposes a per-unit tax of $1 on producers. (i) What happens to total revenue received by producers after they pay the tax to the government? Explain. (ii) Will producer surplus increase, decrease, or stay the same? (iii) Will total surplus increase, decrease, or stay the same? Explain.
The equilibrium price of a good is $30. Supply of this good is more elastic than demand. 5uppase the government introduces a tax on the good. in this case, the price receved by producers is $24, and the price paid by consumers is 1.6 times more.Calculate the tax cost per good for the group bearing most of the tax burden if necessary, round any intermediate calculations and your final answer to two decimal places. $______