Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 35 billion bottles of wine were sold every year at a price of$5 per bottle. After the tax, 28 billion bottles of wine are sold every year; consumers pay $6 per bottle (including the tax), and producers receive $3per bottle.The amount of the tax on a bottle of wine is Sburden that falls on producers is S|per bottle. Of this amount, the burden that falls on consumers is Sper bottle, and theper bottle.True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers.TrueO False

The markets acts as an interacting place for the buyers, and the sellers in the economy. The…

Answered: Suppose that the U.S. government…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The following graph represents the demand and supply for an imaginary good called a pinckney. The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. Complete the following table, given the information presented on the graph. Result Value Per-unit tax Price producers receive before tax Equilibrium quantity after tax In the following table, indicate which of the previous graph’s areas corresponds to each concept. Check all that apply. Concept A B C D E F Producer surplus after the tax is imposed Tax revenue after the tax is imposed Consumer surplus after the tax is imposed
Does a tax on buyers affect the demand curve?
The ticket price for a play at a Broadway theater is $160, and the theater is full every night. The theater owner, in consultation with a local non-profit arts group, wants to make attending the play more affordable, to open up the theater experience to patrons with more limited budgets. The owner decides to lower the ticket price to $50. Sketch a supply-anddemand graph that represents the market for these play tickets under this price-ceiling policy. Briefly explain why this market is not in equilibrium when the price ceiling is in effect. On your graph, clearly identify the size of the shortage or surplus this market will experience.
The following graph depicts a market where a tax has been imposed. Pe was the equilibrium price before the tax was imposed, and Qe was the equilibrium quantity. After the tax, PC is the price that consumers pay, and PS is the price that producers receive. QT units are sold after the tax is imposed. NOTE: The areas B and C are rectangles that are divided by the supply curve ST. Include both sections of those rectangles when choosing your answers. What is the amount of the tax, as measured along the y axis? PC + PS Pe – PS PC – PS PC – P* Pe + PS
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)..
The current market price of bananas is $1 per pound. Use a graph and words to show the effect of a ten cent tax on each pound of bananas. Insert your own numbers into your graph. Be sure to indicate the new price paid by consumers, the new price received by sellers, and the new quantity sold.
If the government removes a tax on a good, then the price paid by buyers will a)increase, and the price received by sellers will increase b)increase, and the price received by sellers will decrease c)decrease, and the price received by sellers will increase d)decrease, and the price received by sellers will decrease
The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $40.60 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per bag) 88293828 8 8 8 8 8 8 180 100 140 120 100 20 Demand Tax Wedge Supply 100 150 200 200 300 350 400 450 500 QUANTITY (Bags of handbags)
The Indian government places a Rs. 1,000 tax on smart phones, will the price paid by consumers raise by more than Rs. 1,000, less than Rs. 1,000 or exactly Rs. 1,000? Explain.
The Australian government have suggested that they might need to increase GST to help fund the COVID-19 rescue package. GST is a tax on goods and services usually paid at the point of sale. Consider the market for bread. Suppose a loaf costs $4.15 and includes a 15-cent tax per loaf. 2. What determines how the tax burden is shared between buyers and sellers?
Suppose the Canadian government has decided to place an excise tax of $20 per tire on producers of automobile tires. Excise taxes are also called sales or commodity taxes. Previously, there was no excise tax on automobile tires. As a result of the excise tax, producers of tires, such as Bridgestone and Michelin, are going to alter their tire prices. The graph illustrates the demand and supply curves for automobile tires before the excise tax. Please shift the appropriate curve or curves on the graph to demonstrate the impact of the new tax. 150 140 130 120 Price 888 110 100 90 Supply 80 00 60 50 ° 1 2 3 4 5 Quantity What is the price consumers pay for a tire post tax? Round to the nearest 10. 70 288 price paid by consumers: $ 100 Demad 10 6 7 8 9 10
Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity (Bags of handbags) Price Buyers Pay (Dollars per bag) Price Sellers Receive (Dollars per bag) Before Tax After Tax Using your answers from 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. Buyers Sellers Tax Burden (Dollars per bag) Elasticity The tax burden falls more heavily on the side of the market that is elastic.

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