Suppose that the equilibrium quantity in the market for widgets has been 300 per month. Then a tax of $5 per widget is imposed. The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3. The government is able to raise 1000 per month in revenue from the tax. What is the deadweight loss from the tax? $250 $50 $100 $500

Suppose that the equilibrium quantity in the market for widgets has been 300 per month. Then a tax of $5 per widget is imposed. The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3. The government is able to raise 1000 per month in revenue from the tax. What is the deadweight loss from the tax? $250 $50 $100 $500

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

If the state government would like to increase tax revenue, please give three examples of products/commodities that the government should impose tax on so that they can collect the highest amount of tax revenue. Please explain your reasons clearly.
Consider a market where supply and demand curves are given by Q = 4P and Q = 12 - 2P. Calculate the equilibrium price and quantity in this market. Now consider a government that collects a unit tax of 0.2 liras for every unit of good sold in the market from the producers. What is the new supply curve? What is the new market equilibrium quantity? What is the price that consumers pay? What is the price producers get? What is the tax incidence on consumers? producers?
Explain conceptually how part of a tax comes out of consumer surplus, while some comes out of producer surplus. How is this distinct from how much consumers lose to deadweight loss?
The following graph shows the market for the long-distance bus rides. In the absence of taxes, the equilibrium price of a ride is $5 and the equilibrium quantity is 10 million rides. Suppose that regulator levies an excise tax on bus service providers. The amount of excise tax equals $2 per ride. How much will bus service providers get per ticket after the tax is imposed? $5.50 $4 $4.50 $5
Suppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.6 and 0.8 respectively. a. Suppose the government imposes a per-unit tax on the cigarette sellers. Who, buyers or sellers, would share a heavier tax burden? Explain your answers without calculation. b. Suppose the government imposes a per-unit tax of $40 on the cigarette sellers. By how much would buyers and sellers of cigarettes share the tax burden respectively? Show your calculation. c. Suppose many small sellers, such as newsstands, complain the heavy tax burden borne by them. Would it be better to these small sellers if the government decides to impose a $20 per-unit tax on both the buyers and the sellers of cigarette? Explain.
7.7 pleaase explain
In the market for candy, researchers have estimated the following demand and supply curves. Demand: P= 8 - Q/100 Supply: P= (3Q)/700 If the government imposes an excise tax of $0.50 per unit. What is tax revenue out of this tax? (Remember that the tax does not change the demand and supply curves).
Would consumer or producer carry the burden of tax if good is elastic? Show on a graph
Price (dollars per pizza) 18 8 6 A 2 S+ tax on sellers S D 0 10 20 30 40 50 60 70 80 90 100 Quantity (thousands of pizzas) The figure above shows the pizza market in the city of Pepperoniville. If the government imposes the sales tax shown in the figure on sellers, then the price the buyer pays for pizza is $ and the price the seller receives for the pizza is $ Just enter value. Do not include the "$" sign.
Doyle and Samphantharak (2008) find that when a 5% gas tax is implemented, prices consumers pay for gas increase by about 4%. What role does demand elasticity play in determining the size of this price change? That is, under what demand elasticity cases would the price change be closer to 5%, or closer to 0%? Illustrate and explain using supply-and-demand graph(s)..
Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss? The greater are the price elasticities of supply and demand, the greater is the deadweight loss. The greater is the price elasticity of supply and the smaller is the price elasticity of demand, the greater is the deadweight loss. The smaller are the decreases in quantity demanded and quantity supplied, the greater the deadweight loss. The smaller is the wedge between the effective price to sellers and the effective price to buyers, the greater is the deadweight loss.
What is an indirect tax give two examples in economics