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 receve PRICE (as per par 8 289 420, TU Before Tax After Tax De Supply 100 200 300 400 500 600 700 800 900 QUANTITY of (?) 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)

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 receve PRICE (as per par 8 289 420, TU Before Tax After Tax De Supply 100 200 300 400 500 600 700 800 900 QUANTITY of (?) 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)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
7. Effects of a Price Ceiling (ID: 015.06.MANK09) PRICE m 7 6 10 5 3 2 1 Figure 6-2 Supply Price Celling Oc. causes a shortage of 30 units of the good. Od. is not binding because it is set below the equilibrium price. Demand 30 60 90 120 150 180 210 240 QUANTITY Refer to Figure 6-2. The price ceiling Oa. causes a shortage of 60 units of the good. Ob. makes it necessary for sellers to ration the good using a mechanism other than price.
If buyers pay more of a tax than do the sellers اختر أحد الخيارات a. demand is more elastic than supply O .b. supply is more elastic than demand O C. None of the above answers is correct O .d. the equilibrium price paid by buyers rises by less than half the amount of the tax „e. the amount of tax revenue collected by the government is almost zero
7. 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 $46.40 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per bag) 200 823953 2 2 2 2 160 100 140 120 100 o 0 50 Tax Wedge Supply Demand 100 150 200 250 300 350 400 450 500 QUANTITY (Bags of handbags) ?
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…
Suppose the federal govemment requires beer drink·ers 10 pay a $2 tax on each case of beer purchased. (Infact, both the federal and state governments imposebeer taxes of some sort.}a . Draw a supply-and-demand diagram of the mar·kct for beer without the tax. Show the price paidby consumers, the price n..~cived by producers*and the quantity of beer sold. What is the differ>encc between t~ price paid by consumers and theprice received by producers?b. Now draw a suppl)'•and--dem.and diagram fort~beer market with t~ tax. Show the price paid byconsumers, the price received by producers, andthe quantity olbec.r sold. What is the differencebetween the price paid by consumers and theprice received by producers? Has the quantity olbeer sold incrca.<;ed or decreased?
1. The table below shows the relationship between price, quantity and income. Price of A Qty Demand Qty Demand for A (units) for B (units) Qty Supply for A Income (RM) (RM) (units) 1.50 1500 20 1000 2500 3.50 1000 50 2000 3000 5.50 500 100 3000 3500 Calculate : (a) Price elasticity of demand for A when price change from RM1.50 to RM5.50. State the type of elasticity. (5 (b) Income elasticity of demand for B when income changes from RM3000 to RM3500. State the type of goods for B (c) Cross elasticity of demand for A and B when price of A changes from RM3.50 to RM1.50. State the relationship. (5 (d) Price elasticity of supply for A when price changes from RM1.50 to RM5.50
8. Suppose we want regular cars to be gradually replaced by electric cars. There are several kinds of government interventions that could be used to make this happen, or at least to push the car market to produce and sell more electric cars. Explain how a tax could be used for this purpose, and then explain how a subsidy could be used for this purpose.
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.
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
5. Calculating tax incidence Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 10,000 cases of cola were sold every week at a price of $4 per case. After the tax, 4,000 cases of cola are sold every week; consumers pay $7 per case, and producers receive $1 per case (after paying the tax).