Price elasticity of demand (PED): Applications of concepts of elasticity PED and business decisions: the effect of price changes on total revenue Revenue box diagrams PED and taxation
Q: Fill in the following table with the quantity sold, the price buyers pay, and the price sellers…
A: The equilibrium price and quantity of a good sold in the market are determined by the forces of…
Q: Q2. Suppose the government wants to reduce the consumption of alcohol in the market by introducing a…
A: Given; There are two scenarios of alcohol consumers in the market:- i) A demand curve for additive…
Q: (Pairs of jeans) (Dollars per pair) (Dollars per pair) Before Tax After Tax Using the data you…
A:
Q: The more elastic the supply of a product, the more likely it is that the a. burden of a tax on the…
A: When the supply is more elastic and there is an increase in the taxes which will cause the supply…
Q: A tax on demand shifts ________________ , and the burden of the tax falls on _______________.…
A: Taxes are the amount charged by the government inorder to maintain the economic value of the…
Q: You are chairperson of a state tax commission responsible for establishing a program to raise new…
A: The price elasticity of demand is the rate change in the amount demanded of services and goods…
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A: The elasticity refers to the responsiveness of the quantity demand due to change in the price.…
Q: Compared to consumers, producers will lose the greater amount of surplus from a tax if supply is…
A: The correct Option is (A) That is the supply is more elastic than the demand
Q: A $1 tax per unit on producers will cause Question 3 options: None of the other answers are…
A: Tax on producers leads to decrease in supply of the good.
Q: Clarify with the help of elasticity analysis how the tax incidence theory helps to trace the final…
A: The economics as a study is based upon the basic idea that the resources which are present with the…
Q: The government has increased VAT on some commodities in order to raise revenue. The market for…
A: The elasticity of demand would result in the percentage change in the quantity demanded because of…
Q: Which of the following statements are correct? The statutory or legal incidence of a tax determines…
A: The tax can be divided into two categories such as per unit tax and lumpsum tax. Any tax results in…
Q: Suppose that the government levies a sales tax on suppliers of good X with a perfectly inelastic…
A: The marginal cost is a concept which measures the additional variable cost incurred by the…
Q: Calculate the percentage of the tax borne by the demander and supplier in each of the following…
A: The fraction of tax borne by the demanded = ES/(ED+ES) Similarly, for supplier = ED/(ED+ES) A) ED =…
Q: supply is less elastic than demand when a market is in equilibrium, then taxing consumers for every…
A: Elasticity of demand depicts how much consumer responds with the change in the price level.
Q: According to studies undertaken by the U.S. Department of Agriculture, the price elasticity of…
A: Price Elasticity refers to the degrees of responsiveness of change in quantity demand with respect…
Q: When demand is less elastic than supply, demanders pay a larger share of the tax and sellers pay a…
A: Elasticity is an important concept used by the government of the country to impose taxes on goods…
Q: When demand is less elastic than supply, demanders pay a larger share of the tax and sellers pay a…
A: When tax is imposed, an incidence or burden of tax on market participants depends upon their…
Q: The government has increased VAT on some commodities in order to raise revenue. The market for…
A: The term "equilibrium" describes a state of no more change. Both Clearly, all sellers and buyers…
Q: Alcohol, tobacco, and gasoline have inelastic demand, so the buyers of these items pay most of the…
A: The alcohol, gasoline, tobacco have inelastic demand, that is less than 1, it means when the price…
Q: The Ramesy rule suggest that society should a. All of these answers are correct b. tax a few goods…
A: The Ramsey rule suggests that goods should be taxed in an inverse proportion to the elasticity of…
Q: uantity is en the governmen imposes an excise tax of $2 per unit on the production of gadgets.…
A: 45) To computed post tax price, we calculate first change in price Elasticity of demand = 0.5…
Q: The Ramesy rule suggest that society should
A: A tax is a compulsory payment which has to be made to the government on purchase of goods and…
Q: The price elasticity of demand is -3, the price elasticity of supply is 1. The government imposes a…
A: Elasticity helps to determine the tax burden. Higher than elasticity, lower the tax burden. Lower…
Q: Explain and demonstrate using appropriate examples how elasticity when it is zero is applied at the…
A: What does an elasticity zero value imply? inelastic If elasticity = 0, it is said to be 'totally'…
Q: When airfares between Santa Rosa and Los Angeles averages $69, the quantity consumed is 42,500…
A: Price elasticity of demand = Percentage change in quantity demanded / Percentage change in price…
Q: Suppose (the numbers are loosely based on reality) that the tax on petrol is raised from 40 cents…
A: The tax on petrol increased by 20 percent and the total tax on petrol increased from 40 percent to…
Q: The concept of elasticity is used to Analyze how much the economy can expand Determine the…
A: Elasticity is an economic metric that quantifies how the amount required for an item or service…
Q: the demand for a product is inelastic but the supply is elastic, the ________ will bear the tax…
A: The burden of tax on consumers and producers is decided by the elasticity of demand and supply. The…
Q: Suppose a tax is imposed on a product that has a completely inelastic supply curve. Who pays the tax
A: Elasticity of supply curve depicts how much producer responds with the change in the price level.
Q: Government is known to utilize a product's elasticity measures to set taxes and subsidies. Use this…
A: Tobacco products Tobacco products include harmful items such as cigarettes etc. People who consume…
Q: "If the government wishes to tax certain goods, it should tax goods that have inelastic rather than…
A: ‘Elasticity(El)’ essentially means the percentage(%) change in Qd divided percentage(%) change in P.…
Q: When airfares between Santa Rosa and Los Angeles averages $69, the quantity consumed is 42,500…
A: Disclaimer :- since you have asked multipart questions we can solve only 3 subparts as per…
Q: smoking to cancer plans to raise the excise tax in cigarettes so the price rises by 10 percent. The…
A: Price elasticity of demand is in turn being defined as the % change in quantity which is being…
Q: Explain how a policymaker who is considering how to raise tax revenues from fuel and vehicles should…
A: The elasticity of demand is a concept which measures the responsiveness of the change in the…
Q: A fixed tax on a perfectly inelastic product implies that the consumer is the one who ends up…
A: A perfectly Inelastic product means that the supply of the product is constant and would not change…
Q: What determines by how much the price goes up when the government implements a price floor?…
A: Price control is a form of government control over the free market to increase welfare. Price floor…
Q: Elasticity plays a large role in tax incidence. Which of the following is most true regarding a tax…
A: Elasticity refers to the responsiveness of the change in the demand and the supply of the goods and…
Q: Suppose that the Australian government imposes a sales tax on a product and both buyers and sellers…
A: Meaning of Price Elasticity of Demand: The price elasticity of demand refers to the situation…
Q: Demand is negatively sloped. Supply is perfectly elastic. Putting an excise tax on sellers will…
A: Basics:- Inelastic side whether the buyers side (demand) or suppliers side ( supply) has to bear the…
Q: Assuming a unitary elastic demand and supply, a tax on the sellers of coffee will cause the price…
A: Equilibrium is at a point to demand come into six the supply curve. When the tax is imposed on the…
Q: The side of the market with the relatively higher elasticity will face more of the tax burden.…
A: The tax burden is inversely related to elasticity. The side of the market with the relatively higher…
Q: A tax targeted to reduce consumption of a good by a specific quantity will raise the most revenue…
A: A tax targeted to reduce consumption of a good by a specific quantity will raise the most revenue…
Q: Using the data you entered in the previous table, calculate the tax burden that falls on buyers and…
A: We can see these values directly from the graph and fill the table to be: QUANTITY PRICE BUYERS…
Q: Market A Market B P(dollars) P (dollars) Q (units) Q (units) 5,000 5,000 Consider two markets…
A: ANS Tax incidence will be larger if the change in quantity demanded due to the tax is greater. PED…
Q: How would I solve this question?: suppose demand for cigarettes is inelastic and supply of…
A: Elasticity refers to an economic instrument that calculates the change in the quantity demanded a…
Q: As price elasticity of demand increases, the burden of a tax gets _______; as price elasticity of…
A: Price elasticity of demand: It can be define as the ration of percentage change in quantity demanded…
Price
- Applications of concepts of elasticity
- PED and business decisions: the effect of price changes on total revenue
- Revenue box diagrams
- PED and
taxation
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- Thoroughly analyze the impact of taxes on tobacco through the perspective of a smoker (a consumer in the tobacco market) worried about rising prices. Focus on price elasticity in your answer.Using the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Tax Burden (Dollars per pair) Elasticity Buyers SellersA tax on a good with perfectly elastic demand causes the supply to shift from S1 to S2, as shown. Use the area tool to draw the triangle representing the producer surplus before the tax. To refer to the graphing tutorial for this question type, please click here. Price ($) S2 S1 4 VIEW SOLUTION A SUBMIT ANSWER 7 OF 14 QUESTIONS COMPLETED MacBook Pro
- Government is known to utilize a product's elasticity measures to set taxes and subsidies. Use this information to set policy on one of the following products: tobacco products, petroleum products, agriculture products, or medical products according to your goal. Research the government's tax/subsidy policy in these areas and any objectives of the tax policy. State your goal, your prescribed action, and why you believe it will work using the information you found.Explain and demonstrate using appropriate examples, how elasticity when it is zero is applied at the level of the government with respect to the setting of prices for various types of goods and services. (Macroeconomics)Question 1 Suppose the government imposes an excise tax of $1 for every gallon of gas sold. Before the tax, the price of a gallon of gas is $2. Consider the following four after-tax scenarios. In each case, (i) use an elasticity concept to explain what must be true for this scenario to arise; (ii) determine who bears relatively more of the burden of the tax, producers or consumers; and (iii) illustrate your answer on a diagram. a) The price of gasoline paid by consumers rises to $2.75. b) The price of gasoline paid by consumers rises to $2.25. c) The price of gasoline paid by consumers rises to $3 per gallon. Assume that the demand curve is downward sloping. d) The price of consumer remains at $2 per gallon after the tax is imposed. Assume that the supply curve is upward sloping.
- A state tax on portable electronic devices causes sales of a single model of a handheld calculator to decrease from 80 to 70 per week. The tax is assessed as a tax on sellers when they receive the units from suppliers. Drag the appropriate curves (including the Quantity curve) to show the effects on the market. To refer to the graphing tutorial for this question type, please click here. Price (S) 100 100 Quant 140 130 120 110 100 GO 80 80 70 00 00 40 30 20 10 80 Quantity (per week) What tax revenue will the state collect from sales of this one model of calculator through the new tax? The tax revenue is $ per week.The Department of Agriculture is interested in analyzing the domestic market for corn. The DA's staff economists estimate the following equations for the demand and supply curves: Qd = 1,600 - 125P Qs = 440 + 165P Quantities are measured in millions of bushels; prices are measured in dollars per bushel. a. Calculate the price elasticities of supply and demand at the equilibrium values. Is demand elastic, inelastic or unit elastic and why? Is supply elastic, inelastic or unit elastic and why? b. The government currently has a $4.50 bushel support price in place. What impact (surplus or shortage) will this support price have on the market? If the government is currently implementing a program that requires it to buy up any surpluses, how much wheat will the government buy?Now assume the government raises the tax from $1.00 to $1.50. This causes sale to decline from 10,000 units to 5,000 units. a) calculate the price(tax) elasticity of demand. b) is it elastic, inelastic, or unit elastic? c) what happens to total tax revenue?
- The demand for mineral water is P=10 – (2/3) Q and supply function for mineral water isP=1+(1/3)Q What is the burden of the tax on producers and consumers and explain how the tax burden isrelated to elasticities? thanks in advance!Please answer the following. A diagram and one paragraph should help to support your answer. Question: With consideration for elasticity (especially PED), what would be one industry in which the government instituting a subsidy would make sense and why?If the elasticity of demand is -1.8 and the elasticity of supply is 1, then consumers are than producers and the relative consumer burden will equal Hint: the relative burden is Elasticity of Supply/(-Elasticity of Demand) and also equals consumer burden / producer burden. more elastic; 1.8 less elastic; 1.8 more elastic; 0.56 less elastic; 0.56
