5. Calculating tax incidenceSuppose 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 percase.per case, and theThe amount of the tax on a case of cola isSper case. Of this amount, the burden that falls on consumers is Sburden that falls on producers is sper 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 TrueO False

In a market, when a tax is imposed on a specific good, a tax amount per unit can be considered as…

Answered: 5. Calculating tax incidence Suppose…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

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Under which circumstances does line tax burden fall entirely on consumers?
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5. Calculating tax incidence Suppose that the local government of Santa Fe decides to institute a tax on seltzer consumers. Before the tax, 20,000 packs of seltzer were sold ever week at a price of $11 per pack. After the tax, 14,000 packs of seltzer are sold every week; consumers pay $14 per pack (including the tax), and producers receive $7 per pack. The amount of the tax on a pack of seltzer is $ burden that falls on producers is $ O True per pack. 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. False per pack. Of this amount, the burden that falls on consumers is $ per pack, and the
2. Suppose the price.elasticity of demand for commödity M is less than one. When a tax is imposed on commodity Mproduetion, it changes the price, quantity, and consumer speņding in which of the following ways? - Price Quantity Spending Irierease Decrease Decreàse. Therease Ancrease a. Increase- b. -Deerease Decrease Decrease Decrease - Decrease Iacrease
11. Consider public policy aimed at smoking. a. Studies indicate that the price elasticity ofdemand for cigarettes is about 0.4. If a packof cigarettes currently costs $2 and thegovernment wants to reduce smoking by20 percent, by how much should it increasethe price? b. If the government permanently increasesthe price of cigarettes, will the policy have alarger effect on smoking one year from nowor five years from now? c. Studies also find that teenagers have ahigher price elasticity than do adults. Whymight this be true?
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Next question Neither the demand nor the supply of sugar is perfectly elastic or inelastic. If the government imposes a 5 percent tax on sugar, the O A. quantity of sugar increases. O B. price of sugar buyers pay rises by 5 percent. O C. price of sugar buyers pay does not change. O D. price of sugar buyers pay increases by less then 5 percent. As O E. price of sugar buyers pay falls by 5 percent. Ass O Time Remaining: 00:57:34 Submit quiz mpleted his course (ECON202 s2022 online) is based on Bade/Parkin: Foundations of Microeconomics, 9e MacBook Pro
5. Calculating tax incidence Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 30,000 cases of cola were sold every week at a price of $4 per case. After the tax, 25,000 cases of cola 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 cola is $ per case. Of this amount, the burden that falls on consumers is $ per case, and the burden that falls on producers is $ per case. 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. True O False
The table below presents the annual market for sofas in Akron, Ohio. Suppose the state government imposes a $250 excise tax on every sofa sold to be paid by customers at the point of sale. Market for Sofas Price (dollars) $1,240 1,180 1,120 1,060 1,000 940 880 820 760 780 Quantity of Sofas Demanded INO 200 230 260 290 320 350 380 410 449 M 470 Quantity of Sofas Supplied 300 TYGO 280 260 240 220 200 sofas 180 160 140 120 Quantity of Sofas Demanded with Excise Tax 50 80 118 140 WACH178 200 230 260 290 320 Instructions: Enter your answers as a whole number. a. Before the excise tax is imposed, what are the equilibrium price and quantity of sofas in Akron? b. Including the excise tax, what is the new equilibrium price consumers pay for sofas after the tax is imposed? $ c. After the excise tax is imposed, what is the new equilibrium quantity of sofas? sofas d. What is the total amount of revenue collected by the government from the excise tax on sofas? $
1 t The data describes the market for luxury boats. Now the government puts 20 percent tax on luxury boats. With the tax imposed, the price of a luxury boat is OA. $330 million OB. $1.10 million OC. $0.20 million D. $1.20 million OE. $1 million a With the 20 percent tax on luxury boats, OA. the buyer pays all of the tax. OB. the buyer and the seller split the tax evenly. OC. the tax reduces the quantity of luxury boats sold to zero, so there is no tax. OD. it is impossible to say how the tax is split between the buyer and seller. OE. the seller pays all of the tax. 9 The government raises tax revenue of s Z 2 W S 3 e d millinn. AOC с C с $ 4 r f % 5 v t 6.0 Oll 6 3 b y h The supply of luxury boats is perfectly elastic, the demand for luxury boats is unit elastic, and with no tax on luxury boats the price is $1 million and 330 luxury boats a week are bought. & 7 u 1.60 1.40 1.20 1.00+ 0.80+ Q n 132 j Price (millions of dollars per boat) 198 264 330 Quantity (boats per week) sss Draw…
Time left 0:. 21) The elasticity of demand for potato chips is 0.6 and the elasticity of supply for these chips is 1.9. If a tax were imposed on purchases of potato chips, then the O a. consumers would pay more of the tax. O b. the producers would pay more of the tax. C. the tax would be equally shared by the consumers and the producers. O d. the consumers would pay the entire tax because their demand is less elastic than the producers' supply. Clear my choice age Next page
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