5. Calculating tax incidence Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 40,000 bottles of wine were sold every week at a price of $4 per bottle. After the tax, 35,000 bottles of wine are sold every week; consumers pay $6 per bottle (including the tax), and producers receive $3 per bottle. The amount of the tax on a bottle of wine iss per bottle. Of this amount, the burden that falls on consumers is per bottle, and the burden that falls on producers iss per bottle. 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 O False

5. Calculating tax incidence Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 40,000 bottles of wine were sold every week at a price of $4 per bottle. After the tax, 35,000 bottles of wine are sold every week; consumers pay $6 per bottle (including the tax), and producers receive $3 per bottle. The amount of the tax on a bottle of wine iss per bottle. Of this amount, the burden that falls on consumers is per bottle, and the burden that falls on producers iss per bottle. 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 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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The following graph shows the daily market for wine. Suppose the government institutes a tax of $46.40 per bottle. This places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per bottle) 200 180 160 120 100 80 60 40 20 + 0 D Before Tax After Tax Buyers Sellers Tax Wedge 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 (Bottles of wine) (Dollars per bottle) Price Sellers Receive (Dollars per bottle) Demand 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bottles of wine) Supply 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 bottle) Elasticity The burden of the tax falls more heavily on the elastic…
macro question 6
Can you explain why am I answer is wrong and what the correct one is.
Attached is a graph diagram depicting the market for soft drinks. If an excise tax equal to $1 per liter is levied on soft drink sellers, please answer the following questions: a. The new equilibrium quantity of soft drinks bought and sold would be ___________ million liters. b. The new equilibrium price paid by buyers of soft drinks would be $__________ per liter. c. The new equilibrium price received by sellers (after-tax) would be $__________ per liter.
6. Who should pay the tax? The following graph shows the labor market for research assistants in the fictional country of Collegia. The equilibrium wage is $10 per hour, and the equilibrium number of research assistants is 200. Suppose the government has decided to institute a $2-per-hour payroll tax on research assistants and is trying to determine whether the tax should be levied on the employer, the workers, or both (such that half the tax is collected from each side). Use the graph input tool to evaluate these three proposals. Entering a number into the Tax Levied on Employers field (initially set at zero dollars per hour) shifts the demand curve down by the amount you enter, and entering a number into the Tax Levied on Workers field (initially set at zero dollars per hour) shifts the supply curve up by the amount you enter. To determine the before-tax wage for each tax proposal, adjust the amount in the Wage field until the quantity of labor supplied equals the quantity of labor…
9. 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 $23.20 per pair, to be paid by the seller. 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. Hint: To see the impact of the tax, first enter the value of the tax in the Tax on Sellers field. Adjust the value in the price field to move the green line to the after-tax equilibrium so that quantity demanded equals quantity supplied. Graph Input Tool Market for Shoes 200 180 I Price (Dollars per pair) $100 160 Quantity Demanded (Pairs of shoes) Quantity Supplied (Pairs of shoes) Supply 250.00 250.00 140 120 100 Supply Shifter 80 Demand Tax on Sellers (Dollars per pair) 60 0.00 40 20 50 100 150 200 250…
6. Who should pay the tax? The following graph shows the labor market for research assistants in the fictional country of Universalia. The equilibrium wage is $10 per hour, and the equilibrium number of research assistants is 250. Suppose the government has decided to institute a $4-per-hour payroll tax on research assistants and is trying to determine whether the tax should be levied on the employer, the workers, or both (such that half the tax is collected from each side). Use the graph input tool to evaluate these three proposals. Entering a number into the Tax Levied on Employers field (initially set at zero dollars per hour) shifts the demand curve down by the amount you enter, and entering a number into the Tax Levied on Workers field (initially set at zero dollars per hour) shifts the supply curve up by the amount you enter. To determine the before-tax wage for each tax proposal, adjust the amount in the Wage field until the quantity of labor supplied equals the quantity of…
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?