5. Calculating tax incidence Suppose that the local government of Ogden decides to institute a tax on cider consumers. Before the tax, 60 billion cases of cider were sold every year at a price of $11 per case. After the tax, 54 billion cases of cider are sold every year; consumers pay $13 per case (including the tax), and producers receive $6 per case. The amount of the tax on a case of cider 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. O True per case. Of this amount, the burden that falls on consumers is $ O False per case, and the

5. Calculating tax incidence Suppose that the local government of Ogden decides to institute a tax on cider consumers. Before the tax, 60 billion cases of cider were sold every year at a price of $11 per case. After the tax, 54 billion cases of cider are sold every year; consumers pay $13 per case (including the tax), and producers receive $6 per case. The amount of the tax on a case of cider 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. O True per case. Of this amount, the burden that falls on consumers is $ O 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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4. 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 $40.60 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per bag) 200 180 160 140 120 100 80 60 40 20 0 Demand 0 50 Tax Wedge Supply ++ 100 150 200 250 300 350 QUANTITY (Baas of handbags) 400 450 500 ?
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.
QUESTION 8 Figure 14 12 10 8 6 4- 2- 10 20 30 40 50 60 70 Refer to Figure. If the government imposed a tax of $6 per unit in this market then which of the following statements would be correct? O a. The burden of tax will fall equally on the buyers and sellers. O b. The burden of tax will fall more on the buyers. O C. The burden of tax will fall more on the sellers. O d. Neither buyer or seller will have to pay the tax.
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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
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)
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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…
6 . Consumer Surplus Ana buys an iPhone for $150 and gets a consumer surplus of $200. Her willingness to pay for an iPhone is $_________. If she had bought the iPhone on sale for $100, her consumer surplus would have been $_______. If the price of the iPhone had been $370, her consumer surplus would have been $_________.
2. The following graph shows the demand and supply for i-Pods. Price 100 80 60 40 20 0 0 80 160 240 Quantity of i-pods 320 is D 400 a. What is equilibrium price and quantity? b. Suppose that a $20 per unit sales tax is placed on the product. What is the new equilibrium price and quantity? c. What proportion of the tax is paid by the consumer, and what proportion is paid by the seller in this case?
Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. Price 24 22- 20 18 Supply 16+ 14+ 12 F G 10+ H 6- 4- K M Demand 3 69 12 15 18 21 24 27 30 33 36 39 Quantity Refer to Figure 8-8. One effect of the tax is to O reduce producer surplus from $96 to $24. O create a deadweight loss of $72. O reduce consumer surplus from $180 to $72. All of the above are correct. 00 2.