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

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. In order to reduce farm output, raise farm prices, and thus raise farm incomes (revenues), the government pays farmers to set aside a portion of their land from production. Using a graph, explain in terms of the elasticity of demand for farm products why farmers may be better-off when harvests are low even if we ignore the money they receive from the set-aside program.
How much of the tax per cell phone is paid by producers and how much is paid by consumers?
7. Effect of a tax on buyers and sellers Part 2 The following graph shows the daily market for wine. Suppose the government institutes a tax of $10.15 per bottle. This places a wedge between the price buyers pay and the price sellers receive.
Question 2 Full explain this question
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
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
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)
12. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes when the tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $11.60 per pair, 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. PRICE (Dollars per pair) 100 90 80 70 60 50 40 30 20 10 0 Demand Before Tax After Tax 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) Buyers Sellers Supply Tax…
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…
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2. Using the following graph, answer the following questions. Also, show/Label your answers for parts a-e on the graph as well. Price 20 18 16 14 12 10 6. 4 6 8 10 12 14 16 Quantity 2 a. Suppose a $4 per-unit tax is imposed on the sellers of this good. What price will buyers pay for the good after the tax is imposed? b. Suppose a $4 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?