P 8 7 6 5 4 3 2 0 10 [Select] 20 30 40 50 units. 60 b) Consumer's economic burden is [Select] Demand 70 80 90 The federal government introduces a $3 tax on consumers of chocolate chip cookies. a) The tax reduces the quantity from [Select] Supply to 100
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![P 8
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[Select]
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units.
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b) Consumer's economic burden is [Select]
Demand
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The federal government introduces a $3 tax on consumers of chocolate chip cookies.
a) The tax reduces the quantity from [Select]
Supply
to
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- 5. Assuming a $9 per unit subsidy is implemented, the welfare gain to consumers will be $______. a) 12 b) 14 c) 16 d) 19 e) 21 f) 22.5 g) 45 h 66 i) 82.5 j) 148.5 k) 1712. The following graph shows the demand and supply for i-Pods. Price 100 80 60 40 20 0 0 80 160 240 Quantity of i-pods 320 is D 400 a. What is equilibrium price and quantity? b. Suppose that a $20 per unit sales tax is placed on the product. What is the new equilibrium price and quantity? c. What proportion of the tax is paid by the consumer, and what proportion is paid by the seller in this case?PRICE (Dollars per pack) 50 45 TAX REVENUE (Dollars) 40 35 30 25 400 360 320 At this tax amount, the equilibrium quantity of cigarettes is government collects $ in tax revenue. 280 240 0 Suppose the government imposes a $10-per-pack tax on suppliers. 200 160 120 0 5 80 40 Supply Now calculate the government's tax revenue if it sets a tax of $0, $10, $20, $25, $30, $40, or $50 per pack. (Hint: To find the equilibrium quantity after the tax, adjust the "Quantity" field until the Tax equals the value of the per-unit tax.) Using the data you generate, plot a Laffer curve by using the green points (triangle symbol) to plot total tax revenue at each of those tax levels. 0 Demand Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. 10 15 20 25 30 35 40 45 50 QUANTITY (Packs) 5 True O False Graph Input Tool Market for Cigarettes Quantity (Packs) 10 15 20 25 30 TAX (Dollars per pack) Demand Price (Dollars per pack) Tax…
- Price 20 18 16 14 12 10 х $1.200 0 300 400 500 $2.000 S1 SO Quantity Assume that the market in the graph above is at an initial equilibrium price of $10 and an equilibrium quantity of 500 units. If the government decides to add a $4 per-unit tax on this good, it will be able to collect the following amount of tax revenue: Demand 1000P $3.00 $2.66 $2.00 18. You are in the business of producing and selling hamburgers, French fries, pizza, and ice cream. The mayor of your city plans to impose a sales tax on one of these products. Based on the elasticities: j. k. Which of these goods would your customers least like to be taxed? Which of these goods would your customers prefer to be taxed? B S₁ So 130 150 bb bb Figure two: effect of excise tax on supply and demand QUESTION #19: a) TO OU a. b. C. b) a. b. C. Before the Tax: Price the Consumer Pays = Price the Producer Receives = Quantity = After the Tax, Price the Consumer Pays = Price the Producer Receives = Tax per unit = d. Quantity = e. Total Tax Revenue = f. Proportion of the Total Tax Consumers Pay = g. Proportion of the Total Tax Producers Pay = h. Who Pays the Burden of the Tax = i. DWL = ?Price of Gasoline P3 P₂ P₁ 0 9₂ 9₂ 52 D S₁ Price Ceiling Quantity of Gasoline Refer to the figure above. With a price ceiling present in this market, what will happen when the supply curve for gasoline shifts from S₁ to S₂? The market price will stay at P₁ due to the price ceiling. A shortage will occur at the price ceiling of P2. The price will increase to P3. A surplus will occur at the new market price of P₂.
- PRICE (Dollars per unit) 350 225 175 50 0 12 +--- Region Between X and Y Between W and X Between Y and Z Z True False 42 54 QUANTITY (Units) For each of the regions listed in the following table, use the midpoint method to identify if the demand for this good is elas elastic, or inelastic. 84 W Demand - Elastic Inelastic Unit Elastic True or False: The slope of the demand curve is equal to the value of the price elasticity of demand.m 18 of 21 > (Figure: The Demand for e-Books) Use Figure: The Demand for e-Books. What is the price elasticity of demand (by the midpoint method) when the price increases from $6 to $8? Figure: The Demand for eBooks Price $10 8 6 8+ 2.33 0.55 0.5 0.67 40 D 50 QuantityPrice (dollars per gallon) S2 $5.50 3.50 2.50 D Quantity (millions of gallons per month) 30 40 45 Assume the graph above illustrates a new tax put into the market for soft drinks. S2 is the supply curve with the $2 tax in place. What price would consumers pay if the tax was placed on consumers instead of producers? 1) $2.00 O 2) $3.50 3) $2.50 4) $1.50
- A sales tax is imposed on good A. The supply of good A is not perfectly elastic or perfectly inelastic. Suppose that the demand for good A becomes more inelastic. (a) Will the tax burden on sellers increase or decrease? (b) Will the DWL increase or decrease?5. Calculating tax incidence Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 10,000 cases of cola were sold every week at a price of $4 per case. After the tax, 4,000 cases of cola are sold every week; consumers pay $7 per case, and producers receive $1 per case (after paying the tax).Price ($) 0 1 2 3 4 5 6 7 8 Quantity 56 48 42 35 28 21 14 7 0 Instructions: Round intermediate calculations and round your answers to two decimal places. If you are entering a negative number be sure to include a negative sign (-) in front of that number. a. The price elasticity of demand for a price change from $2 to $3 is: -0.45 ✔ The slope of the demand curve for a price change from $2 to $3 is: b. The price elasticity of demand for a price change from $3 to $5 is: The slope of the demand curve for a price change from $3 to $5 is: c. The price elasticity of demand for a price change from $6 to $7 is: -7.00 -1.00 → -7.00 x -4.33 The slope of the demand curve for a price change from $6 to $7 is: -700
