Oliva, Noem NAME PRINT LAST NAME, FIRST NAME SECTION# 00 COMMODITY TAXATION If the price of a cup of coffee is $2.00 in the absence of any tax, and a $0.30 per cup tax is levied on coffee, ceteris paribus, then: 1. consumers will be forced to pay $2.30 per cup. sellers will be forced to accept $1.70 per cup. the after-tax price per cup will most likely be between $2.00 and $2.30. the after-tax price per cup will most likely be greater than $2.30. a. b. C. The economic burden of a tax: a. is always shifted to consumers by raising the product price by the amount of the tax. is borne by sellers if supply is perfectly elastic. is partially shifted to consumers through higher prices in most cases. falls on sellers if the statutory burden of the tax is on sellers. b. C. d. Use the graph below to answer questions 3 and 4: Price Supply + Tax $40 Supply $32 $28- Demand $20 $16 tax $4 1200 Quantity $0 800 Asa result of the $12 per-unit tax imposed on this commodity, the quantity pro and there is a deadweight loss of 3. 2.

Oliva, Noem NAME PRINT LAST NAME, FIRST NAME SECTION# 00 COMMODITY TAXATION If the price of a cup of coffee is $2.00 in the absence of any tax, and a $0.30 per cup tax is levied on coffee, ceteris paribus, then: 1. consumers will be forced to pay $2.30 per cup. sellers will be forced to accept $1.70 per cup. the after-tax price per cup will most likely be between $2.00 and $2.30. the after-tax price per cup will most likely be greater than $2.30. a. b. C. The economic burden of a tax: a. is always shifted to consumers by raising the product price by the amount of the tax. is borne by sellers if supply is perfectly elastic. is partially shifted to consumers through higher prices in most cases. falls on sellers if the statutory burden of the tax is on sellers. b. C. d. Use the graph below to answer questions 3 and 4: Price Supply + Tax $40 Supply $32 $28- Demand $20 $16 tax $4 1200 Quantity $0 800 Asa result of the $12 per-unit tax imposed on this commodity, the quantity pro and there is a deadweight loss of 3. 2.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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