Suppose the government places a tax on a product. How does the cost of the tax compare with the revenue raised? The cost of the tax to buyers and sellers is less than the revenue raised from the tax by the government. Without additional information, such as the elasticity of demand for this product, it is impossible to compare tax cost with tax revenue. The loss of surplus to buyers and sellers exceeds the revenue raised from the tax by the government. The cost of the tax to buyers and sellers equals the revenue raised from the tax by the government.

Suppose the government places a tax on a product. How does the cost of the tax compare with the revenue raised? The cost of the tax to buyers and sellers is less than the revenue raised from the tax by the government. Without additional information, such as the elasticity of demand for this product, it is impossible to compare tax cost with tax revenue. The loss of surplus to buyers and sellers exceeds the revenue raised from the tax by the government. The cost of the tax to buyers and sellers equals the revenue raised from the tax by the government.

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

The following graph shows the daily market for jeans when the tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $11.60 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then, enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be scored on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per pair) 100 90 80 10 0 0 Demand Supply 10 20 30 40 50 60 70 80 90 100 QUANTITY (Pairs of jeans) Graph Input Tool Market for Jeans Quantity (Pairs of jeans) Demand Price (Dollars per pair) 10 150.00 Supply Price…
Question 2c - Part 2 Given the following information Qp = 240 - 5P %3D Qs = P where Qp is the quantity demanded, Qs is the quantity supplied and P is the price. Calculate: Producer surplus before tax
The local government decides to impose a sales tax on some selected items. On item X the final prices increases almost the full amount of the tax, demand does not change much and the tax revenues collected are quite high. On item Y the price increases very little but demand falls quite a bit and very little tax revenue is collected. Is this a violation of the law of demand or something else? Explain.
tax on buyers
How does a Tax on Production affect a negatively sloped Demand curve or the Supply Curve? The supply curve shifts to the Left The supply curve shifts to the Right There is no shift, only movement along the Supply Curve The demand curve shifts to the left
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.
Question 8 Consider the following supply and demand functions in a market: p=12-2Q p=2Q Suppose the government imposes a tax rate t*=4 on demand. Compute the total economic tax burden (incidence) on producers (after tax t* is imposed). (Enter your answer to one integer. For "8", you would write 8).
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 the tax incidence on producers? (If you find that the incidence is $0.50 on producers enter your answer as 0.5).
The division of a tax burden between Consumers and Producers is known as Tax IncidenceProducers bear the majority of a tax burden in which of the following circumstances?
Question 1 In the market for swim suits, demand is P = 58 - 0.011Q and supply is P = 5 + 0.009Q. The government imposes a tax of $2 per swim suit. Calculate the total surplus after the tax.
Given the following information QD = 240-5p QS = P Where QD is the quantity demanded, Qs is the quantity supplied and P is the price. Suppose that the government decides to impose a tax of $12 per unit on sellers in the market. Determine : 1: Sellers price after tax 2: Quantity after tax 3: Producer supply after tax 4: Tax Revenue
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).