Oliva , Noerm PRINT LAST NAME, FIRST NAME NAME SECTION# 100 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: is always shifted to consumers by raising the product price by the amount of tuhe a. 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 $0 800 1200 Quantity As a result of the $12 per-unit tax imposed on this commodity, the quantity produced and consumed in this market changes to 800; $2400 800; $3200 and there is a deadweight loss of 1200; $2400 1200; $3200 a. C. b. d. If a $12 per-unit tax is imposed in this market, buyers will bear percent of the tax 4. burden because demand is relatively 33; elastic 67; elastic 33; inelastic 67; inelastic C. a. b. d. 147 Chapter 7 Assignments 2. 3.
Oliva , Noerm PRINT LAST NAME, FIRST NAME NAME SECTION# 100 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: is always shifted to consumers by raising the product price by the amount of tuhe a. 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 $0 800 1200 Quantity As a result of the $12 per-unit tax imposed on this commodity, the quantity produced and consumed in this market changes to 800; $2400 800; $3200 and there is a deadweight loss of 1200; $2400 1200; $3200 a. C. b. d. If a $12 per-unit tax is imposed in this market, buyers will bear percent of the tax 4. burden because demand is relatively 33; elastic 67; elastic 33; inelastic 67; inelastic C. a. b. d. 147 Chapter 7 Assignments 2. 3.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:Oliva
, Noerm
PRINT LAST NAME, FIRST NAME
NAME
SECTION# 100
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:
is always shifted to consumers by raising the product price by the amount of tuhe
a.
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
$0
800
1200
Quantity
As a result of the $12 per-unit tax imposed on this commodity, the quantity produced and
consumed in this market changes to
800; $2400
800; $3200
and there is a deadweight loss of
1200; $2400
1200; $3200
a.
C.
b.
d.
If a $12 per-unit tax is imposed in this market, buyers will bear
percent of the tax
4.
burden because demand is relatively
33; elastic
67; elastic
33; inelastic
67; inelastic
C.
a.
b.
d.
147
Chapter 7 Assignments
2.
3.
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