5. Calculating tax incidenceSuppose that the U.S. government decides to charge beer producers a tax. Before the tax, 25 billion cases of beer were sold every year at a price of$7 per case. After the tax, 19 billion cases of beer are sold every year; consumers pay $8 per case, and producers receive $4 per case (after payingthe tax)The amount of the tax on a case of beer isper case. Of this amount, the burden that falls on consumers isper case, and the burdenthat falls on producers isper caseTrue or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumersTrueFalse

The amount of tax on a case is calculated as follows.

Answered: 5. Calculating tax incidence Suppose…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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…
The vertical distance between points A and B represents a tax in the market. 12 11 10 210 A Supply 9 PRICE 65 4 3 B 10 2 1 MNr Demand + 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 QUANTITY Refer to Figure. The imposition of the tax causes the price paid by buyers to O decrease by $2. O increase by $3. O decrease by $4, O increase by $5.
1. Suppose that the market demand for coffee is Pd = 15 - Qd and the market supply is Ps= Qs - 5. What is the equilibrium price and quantity for coffee? Suppose that the government imposes a tax of $1 per unit to reduce coffee consumption and raise government revenues. What will be the new equilibrium quantity? What price will the buyer pay? What price will the seller receive? A o F2 BE #3 ㅁㅁ F3 $ A t 4 OFFIC DEO DOD 000 F4 % 5 F5 MacBook Air 6 F6 & 7 L * 8
5. Calculating tax incidence Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 50 billion cases of cola were sold every year at a price of $6 per case. After the tax, 45 billion cases of cola are sold every year; consumers pay $8 per case (including the tax), and producers receive $5 per case. The amount of the tax on a case of cola is $ the burden that falls on producers 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 producers. True per case. Of this amount, the burden that falls on consumers is $ per case. False per case, and
5. Calculating tax incidence Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 40 billion cases of cola were sold every year at a price of $7 per case. After the tax, 34 billion cases of cola are sold every year; consumers pay $8 per case (induding the tax), and producers receive $4 per case. per case, and the The amount of the tax on a case of cola isS per case. Of this amount, the burden that falls on consumers is S burden that falls on producers is s 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 O False
1. Consider the following policies, each of which is aimed at reducing violent crime by reducing the use of guns. Illustrate by demand and supply diagrams followed with an explanation the effect of each of these proposed policies. [Hint: For each question, show the price paid by consumers, the price received by producers, and the quantity of guns sold, the difference between the price paid by consumers and the price received by producers, has the number of guns sold increased or decreased] A tax on gun buyers а. b. A tax on gun sellers A binding price floor on guns с. d. A tax on gun ammunition
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5. Calculating tax incidence Suppose that the U.S. government decides to charge beer producers a tax. Before the tax, 10,000 cases of beer were sold every week at a price of $4 per case. After the tax, 5,000 cases of beer are sold every week; consumers pay $6 per case, and producers receive $3 per case (after paying the tax), The amount of the tax on a case of beer is S burden that falls on producers is True per case. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers. O False per case. Of this amount, the burden that falls on consumers is 5 per case, and the
Kel ng Time: * Question Completion Status: The vertical distance between points and represents a tax in the market. PRICE 12 10 9 8 CO 76 5 inutes, 37 seconds. 4 3 2 1 A B Supply Demand +++ H 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6) QUANTITY Refer to Figure 8-2. The amount of tax revenue received by the government is a. $2.50. b. $9. c. $4. d. $5. A Moving to another question will save this response. Mac
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 $23.20 per pair. This places a wedge between the price buyers pay and the price sellers receive. PRICE (Dolars per pair) 100 90 0 0 Before Tax After Tax 100 200 Buyers Sellers W 420, 70 Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax Quantity Price Buyers Pay (Pairs of shoes) (Dollars per pair) Price Sellers Receive (Dollars per pair) Supply Derrand 400 500 600 300 000 600 QUANTITY(as of show) Using the data you entered in 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 pair) Elasticity The burden of the tax falls more heavily on the eastic side of the…
4. The St Lawrence County legislature needs some cash and has imposed a $3.00 tax on all Hostess Twinkies sold in the county. Because we eat a collective total of 10,000 Twinkies a month here, they expect to raise $30,000 a month in tax revenues. Are they likely to raise this amount? Explain why or why not, using the concepts of supply and demand and taxation, What general economic effect will they get by imposing this tax?
3 3 points The figure below shows the market for snowboards in the state of Colorado. The Colorado state legislature has imposed a sales of tax on each snowboard sold. Assume that the pre-tax price of a snowboard was $50. After the tax, consumers are paying $55 per snowboard while firms are receiving $40 per snowboard. DI Arse 1 The tax burden on households is $30 0000 O $5 $10 $15 $20 Sept O100

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