5. Calculating tax incidence Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 25 million cases of cola were sold every month at a price of $7 per case. After the tax, 18 million cases of cola are sold every month; consumers pay $8 per case, and producers receive $5 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 smaller if the tax had been levied on consumers. O True O False

5. Calculating tax incidence Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 25 million cases of cola were sold every month at a price of $7 per case. After the tax, 18 million cases of cola are sold every month; consumers pay $8 per case, and producers receive $5 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 smaller if the tax had been levied on consumers. O True O False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Imagine the government imposes a $30 excise tax on sellers of cell phones by charging $30 for each cell phone sold. If we have normal demand and supply curves, the price of cell phones will: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. Rise by less than $30. b Rise by more than $30. Rise by exactly $30. d Buyers of cell phones will bear the entire burden of the tax. e Sellers of cell phones will bear the entire burden of the tax.
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.
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.
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Effect of a tax on buyers and sellers The following graph shows the daily market for jeans. Suppose the government institutes a tax of $10.15 per pair. This places a wedge between the price buyers pay and the price sellers receive. 0100200300400500600700800900100050454035302520151050PRICE (Dollars per pair)QUANTITY (Pairs of jeans)Tax WedgeDemandSupply 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 Price Sellers Receive (Pairs of jeans) (Dollars per pair) (Dollars per pair) Before Tax After Tax 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 Elasticity…
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9) 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. $30 $20 $10 Price (P) of airline tickets (in dollars per ticket) How much of the per-ticket tax is paid by passengers? $40 230 200 190 2850 3000 Swith tax Sno tax D Figure 14 Image author created Quantity (Q) of airline tickets (thousands per day)
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