i. The elasticity of demand for beer in country A is 1.8 and the elasticity of demand for beer in country B is 1.7. Suppose that the supply of beer is the same in both countries and that both countries impose the same level of tax on beer. Does the consumer in country A share more burden of tax? Suppose the demand curve for sugar is Q = 60-3P and the supply curve is Q = 2P. Suppose the government announces a per-unit tax of 1 on the price of sugar. What is the deadweight loss from the tax? Why do you think a policymaker and a consumer might interpret this deadweight loss differently?

i. The elasticity of demand for beer in country A is 1.8 and the elasticity of demand for beer in country B is 1.7. Suppose that the supply of beer is the same in both countries and that both countries impose the same level of tax on beer. Does the consumer in country A share more burden of tax? Suppose the demand curve for sugar is Q = 60-3P and the supply curve is Q = 2P. Suppose the government announces a per-unit tax of 1 on the price of sugar. What is the deadweight loss from the tax? Why do you think a policymaker and a consumer might interpret this deadweight loss differently?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 20RQ: Under which circumstances does line tax burden fall entirely on consumers?

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Question

i. The elasticity of demand for beer in country A is 1.8 and the elasticity of
demand for beer in country B is 1.7. Suppose that the supply of beer is
the same in both countries and that both countries impose the same level
of tax on beer. Does the consumer in country A share more burden of tax?
Suppose the demand curve for sugar is Q = 60-3P and the supply curve
is Q=2P. Suppose the government announces a per-unit tax of 1 on the
price of sugar. What is the deadweight loss from the tax?
Why do you think a policymaker and a consumer might interpret this
deadweight loss differently?

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Step 2: i. Determine whether consumer A share the burden of tax

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Step 3: ii. Determine the deadweight loss from tax

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Step 4: iii. Determine why policymaker will evaluate deadweight loss differently

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Help me with part by drawing graph please
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