$45 $40 $35 $30 Price (dollars per dispoable vape) $25 $20 $15 $10 $5 2 3 4 5 6 D Quantity (millons of disposable vapes) The figure shows the market for disposable vapes. In the figure, what is the total price paid by buyers, the price received and kept by sellers, and the quantity? Now we will explore 3 possible taxes the government might impose. Each tax is independent of the other; that is, the government will use only one of the three alternatives. 1. Suppose the government imposes a tax of $10 per disposable vape on suppliers. What is the total price paid by buyers, the price received and kept by sellers, and the quantity? 2. Now suppose the government imposes a tax of $10 per disposable vape on buyers. What is the total price paid by buyers, the price received and kept by sellers, and the quantity? 3. Finally suppose instead the government imposes a tax of $5 per disposable vape on sellers and also a tax of $5 per disposable vape on buyers. What is the total price paid by buyers, the price received and kept by sellers, and the quantity? What is the total tax revenue received by the government when it taxes only sellers? When it taxes only buyers? When it taxes both buyers and sellers? What is the allocatively efficient quantity of disposable vapes when sellers are taxed $5 and buyers are also taxed $5 per disposable vape? Illustrate how the market (that is, the demand curve and/or supply curve) for disposable vapes changes when sellers are taxed $5, and buyers are also taxed $5 per disposable vape. Indicate the equilibrium quantity.
$45 $40 $35 $30 Price (dollars per dispoable vape) $25 $20 $15 $10 $5 2 3 4 5 6 D Quantity (millons of disposable vapes) The figure shows the market for disposable vapes. In the figure, what is the total price paid by buyers, the price received and kept by sellers, and the quantity? Now we will explore 3 possible taxes the government might impose. Each tax is independent of the other; that is, the government will use only one of the three alternatives. 1. Suppose the government imposes a tax of $10 per disposable vape on suppliers. What is the total price paid by buyers, the price received and kept by sellers, and the quantity? 2. Now suppose the government imposes a tax of $10 per disposable vape on buyers. What is the total price paid by buyers, the price received and kept by sellers, and the quantity? 3. Finally suppose instead the government imposes a tax of $5 per disposable vape on sellers and also a tax of $5 per disposable vape on buyers. What is the total price paid by buyers, the price received and kept by sellers, and the quantity? What is the total tax revenue received by the government when it taxes only sellers? When it taxes only buyers? When it taxes both buyers and sellers? What is the allocatively efficient quantity of disposable vapes when sellers are taxed $5 and buyers are also taxed $5 per disposable vape? Illustrate how the market (that is, the demand curve and/or supply curve) for disposable vapes changes when sellers are taxed $5, and buyers are also taxed $5 per disposable vape. Indicate the equilibrium quantity.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:Price (dollars per dispoable vape)
$45
$40
$35
$30
$25
$20
$15
$10
$5
0
2
3
4
5
6
S
Quantity (millons of disposable vapes)
The figure shows the market for disposable vapes. In the figure, what is the total price paid by buyers, the
price received and kept by sellers, and the quantity? Now we will explore 3 possible taxes the government
might impose. Each tax is independent of the other; that is, the government will use only one of the three
alternatives.
1. Suppose the government imposes a tax of $10 per disposable vape on suppliers. What is the total
price paid by buyers, the price received and kept by sellers, and the quantity?
2. Now suppose the government imposes a tax of $10 per disposable vape on buyers. What is the total
price paid by buyers, the price received and kept by sellers, and the quantity?
3. Finally suppose instead the government imposes a tax of $5 per disposable vape on sellers and also a
tax of $5 per disposable vape on buyers. What is the total price paid by buyers, the price received
and kept by sellers, and the quantity?
What is the total tax revenue received by the government when it taxes only sellers? When it taxes only
buyers? When it taxes both buyers and sellers?
What is the allocatively efficient quantity of disposable vapes when sellers are taxed $5 and buyers are
also taxed $5 per disposable vape?
Illustrate how the market (that is, the demand curve and/or supply curve) for disposable vapes changes
when sellers are taxed $5, and buyers are also taxed $5 per disposable vape. Indicate the equilibrium
quantity.
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