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 Price Sellers Receive (Pairs of jeans) (Dollars per pair) (Dollars per pair) Before Tax After Tax Using the data you entered in the previous table, calculate the tax incidence borne by buyers and sellers, respectively, and calculate the price elasticity of demand and supply between the initial equilibrium quantity and the after-tax equilibrium quantity using the midpoints formula. Enter y results in the following table. Tax Incidence (Dollars per pair) Elasticity Buyers Sellers The tax incidence lies more heavily on the elastic side of the market.

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 Price Sellers Receive (Pairs of jeans) (Dollars per pair) (Dollars per pair) Before Tax After Tax Using the data you entered in the previous table, calculate the tax incidence borne by buyers and sellers, respectively, and calculate the price elasticity of demand and supply between the initial equilibrium quantity and the after-tax equilibrium quantity using the midpoints formula. Enter y results in the following table. Tax Incidence (Dollars per pair) Elasticity Buyers Sellers The tax incidence lies more heavily on the elastic side of the market.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Q10
The following graph shows the daily market for jeans when the tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $11.60 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then, enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be scored 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. PRICE (Dollars per pair) 100 90 80 10 0 0 Demand Supply 10 20 30 40 50 60 70 80 90 100 QUANTITY (Pairs of jeans) Graph Input Tool Market for Jeans Quantity (Pairs of jeans) Demand Price (Dollars per pair) 10 150.00 Supply Price…
Suppose that the supply of oil is elastic and demand for oil is inelastic. If the government taxes oil, who will bear most of the tax burden?
Price $3.50 3 2.50 $0.25 $1.00 1,200 1,500 $0.50 Supply The figure above illustrates a market for gasoline with a $1 tax imposed on the buyers. What is the seller's tax incidence? Between $0.00 and $1.00 depending on elasticity of supply. Demand Demand + $1 tax Quantity
7. Effect of a tax on buyers and sellers The following graph shows the daily market for wine. Suppose the government institutes a tax of $40.60 per bottle. This places a wedge between the price buyers pay and the price sellers receive. 200 180 160 Demand Supply 140 120 100 Tax Wedge 60 40 20 100 200 00 400 500 B00 00 1000 00 QUANTITY (Botles of wine) PRICE (Dolars per bottle)
Given the following information QD = 240-5p QS = P Where QD is the quantity demanded, Qs is the quantity supplied and P is the price. Suppose that the government decides to impose a tax of $12 per unit on sellers in the market. Determine : 1: Sellers price after tax 2: Quantity after tax 3: Producer supply after tax 4: Tax Revenue
The table below illustrates the market for Internet services. Use a demand-supply graph to answer the following. Draw a graph of the market for internet services before the tax (only plot the supply and demand functions). Suppose the government imposes a $15 tax per month on the supply side of the market. Sketch the new supply function after the tax.
#5 The government imposes an excise tax on house paint. The house paint tax incidence takes place within a market where the supply of house paint is perfectly inelastic and the demand for house paint is perfectly elastic. The excise tax is paid by the government. producers of house paint. consumers of house paint.
6. The government decides to place a $6 unit tax on a product. The following elasticities are known: E, = - 1; E,= 2. By how much does the price paid by the demanders increase because of this tax?
12. Effect of a tax on buyers and sellers The following graph shows the daily market for wine when the tax on sellers is set at $0 per bottle. Suppose the government institutes a tax of $23.20 per bottle, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) 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. 180 160 140 120 4 100 80 60 Demand 40 20 PRICE (Dollars per bottle) 200 0 0 Supply 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bottles of wine) Graph Input Tool Market for Wine…
The equilibrium price in a market is $60. A tax is placed on this market that results in buyers paying $65 and sellers only getting to keep $40 of that. Which of the following is definitely true based on this information? Buyers and sellers have the same elasticity. The statutory burden of the tax is on the sellers The size of the tax is $15. Sellers have a more elastic response to this tax. The size of the tax is $20. Buyers have a more elastic response to this tax. If 25 units of this good were sold before the tax was imposed and 20 units were sold after the tax was imposed, how much tax revenue does the government collect? Tax revenue: $ If the purpose of this tax was to correct an externality, what kind of externality might it have been, and what was the per unit size of the externality? positive consumption externality; $15 negative production externality; $20 positive consumption externality; $25 negative consumption externality; $25
The following graph represents the demand and supply for blinkies (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. PRICE (Dollars per blinkie) 26.00 18.00 10.00 Demand Result Per-unit tax B D F 33 U 20 E 36 QUANTITY (Blinkies) Complete the following table, given the information presented on the graph. $ Price consumers pay before tax $ Equilibrium quantity before tax Supply Value In the following table, indicate which areas on the previous graph correspond to each concept. Check all that apply. Concept Producer surplus after the tax is imposed Consumer surplus after the tax is imposed Tax revenue after the tax is imposed A U B 0 0 с 0 0 D 0 0 E 0 F 0 0