In order to reduce environmentally harmful emissions, the state of California wanted todiscourage the use of large SUVS. The state found that the demand and supply schedules ofSUVS were the following:Price of SUVS Quantity of SUVS DemandedQuantity of SUVS Supplied(in thousands)450(in thousands)$33,000$32,000$31,000$30,000$29,000$28,000$27,000$26,000$25,000$24,00010040020035030030040025050020060015070010080050900d) Suppose that due changes in a combination of factors including higher gas prices,changes in consumer preferences and reduced incomes, the demand for SUVS hasbecome more elastic since the data on demand was collected. How would this effectwho bears the burden of the tax? How would it effect the amount of deadweight loss?

Elasticity is defined as the responsiveness or sensitiveness on the demand if the factor influencing…

d) Suppose that due changes in a combination of factors including higher gas prices, changes in consumer preferences and reduced incomes, the demand for SUVS has become more elastic since the data on demand was collected. How would this effect who bears the burden of the tax? How would it effect the amount of deadweight loss?

d) Suppose that due changes in a combination of factors including higher gas prices, changes in consumer preferences and reduced incomes, the demand for SUVS has become more elastic since the data on demand was collected. How would this effect who bears the burden of the tax? How would it effect the amount of deadweight loss?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose the market for purses can be described where P is price per bag and quantity is measured as hundreds of bags per day. The government decides to levy a $2 tax on each bag of almonds to be taken at the register to capitalize on the recent increase in almond consumption. How much deadweight loss would exist in the market ?
Suppose that the Australian government imposes a sales tax on a product and both buyers and sellers share the burden of the If the price elasticity of demand for the product is perfectly inelastic. Which of the following is true? Select one: a. Sellers would pay more of the tax than buyers. b. Buyers would pay all of the tax. c. Buyers and sellers would share the tax burden equally. d. Sellers would pay all the tax.
If the government levies a $700 tax per motorcycle on sellers of motorcycles, then the price paid by buyers of motorcycles would
Assume the state of Alaska placed a tax on playing cards of 7 cents per pack. If the state generated $42630 in revenue, how many packs of cards were sold?
Suppose the demand for a product is given by P = 100 – 2Q. Also, the supply is given by P = 20 + 6Q. If an $8 per-unit excise tax is levied on the buyers of a good, what proportion of the tax will be paid by the buyers?. Group of answer choices 75% 40% 60% None of these 25%
Doyle and Samphantharak (2008) find that when a 5% gas tax is implemented, prices consumers pay for gas increase by about 4%. What role does demand elasticity play in determining the size of this price change? That is, under what demand elasticity cases would the price change be closer to 5%, or closer to 0%? Illustrate and explain using supply-and-demand graph(s)..
Consider an ad-valorem tax on a good X. The Demand for good X is constant elasticity with elasticity -2. The Supply for good Y is constant elasticity with elasticity 3. Consider the same setting as for the previous question. When a tax of 1% of the price is imposed on good X, then equilibrium quantity of X exchanged declines by what percentage?
Suppose in the market for cigarettes, the price elasticity of supply is 2.4 and the price elasticity of demand is −0.8. If an excise tax is imposed on sellers of cigarettes, then _____. a buyers and sellers will pay equal shares of the tax b buyers will pay a greater share of the tax than sellers will c buyers will pay the whole tax d sellers will pay a greater share of the tax than buyers will e sellers will pay the whole tax
What is the price elasticity of demand(Using the Midpoint method) when the price changes from $10 to $13? If the Government imposes a tax of $6 per burrito, how many burritos will be sold in the market?
Microeconomics Question 1: True or False. Explain. a. When the demand curve of a good shift to the left, it becomes more inelastic at every level of price. b. If the tax burden falls entirely on buyers a good (tax in per unit imposed on seller), the demand of that good should be perfectly elastic. Question 2: Suppose the demand and supply for gasoline are given by =20-2P and Q -4+10 where P is the price in $ per gallon, and quantity is measured in millions of gallons per day a. Find the equilibrium price/quantity for this market b. How much is the price elasticity of demand and price elasticity of supply at this equilibrium? c. Suppose that the state government decides to tax $2/gallons on consumers. Find the new equilibrium prices and the new equilibrium quantity d. What is total tax payment in dollars to the state government? How much is the share of tax paid by consumers e Graph your results
a)Show in four diagrams the incidence of an indirect (specific) tax in the case of elastic and inelastic demand and elastic and inelastic supply. b)Consider supply in the long run. Assume that a specific tax is imposed on a good that was previously untaxed. How will the incidence of this tax change as time passes?