A fixed tax on a perfectly inelastic product implies that the consumer is the one who ends up bearing the full burden of the tax. True or false
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A fixed tax on a perfectly inelastic product implies that the consumer is the one who ends up bearing the full burden of the tax.
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- Who would pay a tax imposed on the supplier when the price elasticity of supply is inelastic and the price elasticity of demand is elastic?Suppose an economist estimates that the price elasticity of supply for red wine is2.4 while its price elasticity of demand is -4.0.If the government decides to impost a per-unit sales tax of $40 per bottle of redwine, how would the market price for red wine be affected? Show yourcalculation.A local government is seeking to impose a specific tax on hotel rooms. The price elasticity of supply of hotel rooms is 3.5, and the price elasticity of demand is 0.3. If the new tax is imposed, who will bear the greater burden-hotel suppliers or hotel consumers? The hotel consumers pay percent and hotel suppliers pay percent of the tax. (Enter your responses rounded one decimal place.)
- Suppose the elasticity of demand for a product is 0 and the elasticity of supply is 1. If the government imposes a tax on the product, then: a) buyers pay a smaller share of the tax than do sellers but both buyers and sellers pay some of the tax. b) seller pays all of the tax c) buyers and sellers pay exactly the same share of the tax. d) buyer pays all of the taxExcise taxes are usually imposed on products with elastic demand. False TrueThe elasticity of demand for chocolate chip cookies is 0.6 and the elasticity of supply for these cookies is 1.9. If a tax is imposed on purchases of chocolate chip cookies, then the consumers would pay more of the tax. consumers would pay the entire tax because their demand is less elastic than the producers' supply. tax would be equally shared by the consumers and the producers. producers would pay more of the tax.
- The price elasticity of demand is -3, the price elasticity of supply is 1. The government imposes a per-unit tax of 80 Cents on the sale of a cup of coffee in paper cups. Compute how much of the 80 Cents per cup is actually borne by the consumer and how much is borne by the seller.Suppose an economist estimates the price elasticity of demand for sugary drinks is -4.2, while its price elasticity of supply is 1.2. If the government decides to impose a per-unit tax of $9 per can of sugary drinks sold, how would the market price of sugary drinks be affected? Show your calculationTo encourage people to stop smoking the government of a country introduces an indirect tax of 20% on the price of cigarettes(Currently 10$ per packet). The price elasticity of demand for cigarettes in the country is estimated to be 0.6. Describe the likely impact the tax will have on a, the demand for cigarettes b, government revenue
- Suppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.8 and 0.7 respectively. Suppose the government imposes a per-unit tax of $45 on the cigarette sellers. By how much would buyers share the tax burden respectively? Show your calculation.The demand function for beef is Qd = 100 – 3P and supply function for beef is Qs = 10 +2P. Price elasticity of demand is – 0.1 and price elasticity of supply is 0.02. ii. Calculate new price of beef in the market when government introduces a specific tax of N$0.25 per kg.Market for TVs are perfectly competitive. Assume TV supply is point elastic and upward sloping Government imposes consumer tax upon TVs. If point elasticity of demand is inelastic, is deadweight loss generated by the tax higher or lower relative to where the point elasticity of demand is elastic.