Suppose the demand curve for a good is highly elastic and the supply curve is highly inelastic. If the government taxesthis good,O buyers and sellers will each share 50 percent of the burden, regardless of the elasticities of the demand and supplycurves.sellers will bear a larger share of the tax burden.the distribution of the burden will depend upon whether the buyers or the sellers are required to send the tax to thegovernment.buyers will bear a larger share of the tax burden.

The burden of a tax is generally shared by the buyers and sellers in a market. In other words, the…

Answered: Suppose the demand curve for a good is…

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 market supply and demand for a product are shown in the diagram below. Now supose the government imposes a per-unit tax of $1 on producers. (i) What happens to total revenue received by producers after they pay the tax to the government? Explain. (ii) Will producer surplus increase, decrease, or stay the same? (iii) Will total surplus increase, decrease, or stay the same? Explain.
The equilibrium price of a good is $30. Supply of this good is more elastic than demand. 5uppase the government introduces a tax on the good. in this case, the price receved by producers is $24, and the price paid by consumers is 1.6 times more.Calculate the tax cost per good for the group bearing most of the tax burden if necessary, round any intermediate calculations and your final answer to two decimal places. $______
Solve in 1 min i will give u instant like indeed
Cars D Suppose that your city puts an excise tax on cars but collects the tax from car buyers rather than from car sellers. Each buyer has to pay the tax when the car is registered. What would the likely effect be in the market for cars shown above? Select one: O a. S would shift to the right. Ob.S would shift to the left. O c. D would shift to the left. O d. D would shift to the right. Check Next page
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.
Identify whether the statements about the economics of taxes are true or false. a. An excise tax can distort incentives and create missed opportunities for mutually beneficial transactions. b. When demand is elastic and supply is inelastic, the burden of a tax falls mainly on consumers. c. When demand is inelastic and supply is elastic, the burden of a tax falls mainly on producers. d. The incidence of a tax is determined by which group – buyers or sellers – must actually pay the gov
Given the demand and supply equations below, show the burden of a 50% tax on the producers. What is the (a) burden, tax revenue? Then replace the % tax with $40 per unit tax. What is the tax burden and tax revenue? 200 I0 120 00 PO GO 20 Qtr 140 IGO I O % tax: burden on consumer burden on producer tax revenue Unit tax: burden on con burden on producer sumer tax revenue Which tax as a consumer do you prefer?
What happens to the deadweight loss and taxrevenue when a tax is increased?
Refer to the graph shown. Assume the market is initially in equilibrium at point j in the graph but the imposition of a per-unit tax on this product shifts the supply curve up from SO to S1. The lost consumer surplus of this tax is equal to the area: 0 cdjh. deij. Ohji. đến khi. INIMI 43 Isiswissw h k $1 SO Demand Quantity
1. The demand for the product S is Q = 500 – 8P and its supply is Q = 200 + 4P. The good is currently untaxed, but the government needs to raise tax by taxing per unit of the good. a. Calculate excess burden for the product S. b. Calculates marginal excess burden for the product S? %3D The exact amount of the tax is not specified.
Would consumer or producer carry the burden of tax if good is elastic? Show on a graph
If a constant $1 per unit tax is imposed on producers, A. producers can always pass the tax burden to consumers by raising the price by a dollar. B. producers will pay more than $0.5 tax for each unit of the good sold if supply is less elastic than demand. C. producers will pay less than $0.5 tax for each unit of the good sold if demand is more elastic than supply. D. producers must absorb the tax themselves and cannot raise the price.

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