The data describes the market for luxury boats. Now the government puts 20 percent tax on luxury boats. With the tax imposed, the price of a luxury boat is A. $0.40 million B. $2.40 million OC. $220 million OD. $2 million OE. $2.20 million With the 20 percent tax on luxury boats, A. the buyer pays all of the tax. OB. the seller pays all of the tax. OC. the buyer and the seller split the tax evenly. O D. it is impossible to say how the tax is split between the buyer and seller. OE. the tax reduces the quantity of luxury boats sold to zero, so there is no tax. Selected: ... The supply of luxury boats is perfectly elastic, the demand for luxury boats is unit elastic, and with no tax on luxury boats the price is $2 million and 220 luxury boats a week are bought. 3.20 2.80 2.40- 2.00- 1.60+ 88 Price (millions of dollars per boat) -$+tax 132 176 220 Quantity (boats per week) >>> Draw only the nhierte enerified in the nuection 264
The data describes the market for luxury boats. Now the government puts 20 percent tax on luxury boats. With the tax imposed, the price of a luxury boat is A. $0.40 million B. $2.40 million OC. $220 million OD. $2 million OE. $2.20 million With the 20 percent tax on luxury boats, A. the buyer pays all of the tax. OB. the seller pays all of the tax. OC. the buyer and the seller split the tax evenly. O D. it is impossible to say how the tax is split between the buyer and seller. OE. the tax reduces the quantity of luxury boats sold to zero, so there is no tax. Selected: ... The supply of luxury boats is perfectly elastic, the demand for luxury boats is unit elastic, and with no tax on luxury boats the price is $2 million and 220 luxury boats a week are bought. 3.20 2.80 2.40- 2.00- 1.60+ 88 Price (millions of dollars per boat) -$+tax 132 176 220 Quantity (boats per week) >>> Draw only the nhierte enerified in the nuection 264
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:UC. the buyer and the seller split the tax evenly.
O D. it is impossible to say how the tax is split between the buyer
and seller.
O E. the tax reduces the quantity of luxury boats sold to zero, so
there is no tax.
The government raises tax revenue of $0 million.
>>> Answer to 1 decimal place.
The graph shows the market for luxury boats before and after the 20
percent tax is put on luxury boats.
Draw a shape that represents the excess burden of the tax.
The tax is
because at the quantity produced
O A. inefficient; marginal cost exceeds marginal benefit.
OB. efficient; marginal benefit exceeds marginal cost
OC. efficient; marginal cost exceeds marginal benefit
OD. inefficient; marginal benefit exceeds marginal cost
OE. efficient; the seller receives the price the buyer pays
2
%
5
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6
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Selected:
none
7
O
*
1
8
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9
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The supply of luxury boats is perfectly elastic, the demand for
luxury boats is unit elastic, and with no tax on luxury boats the
price is $2 million and 220 luxury boats a week are bought.
3.20
O
2.80-
2.40-
2.00-
1.60-
88
Price (millions of dollars per boat)
Delete Clear ?
✓
132
220
176
Quantity (boats per week)
)
0
>> Draw only the nhierte enerified in the muestion
р
D
+ 11
30
$+tax
264
Next
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Transcribed Image Text:5
The data describes the market for luxury boats.
Now the government puts 20 percent tax on luxury boats.
With the tax imposed, the price of a luxury boat is
OA. $0.40 million
OB. $2.40 million
OC. $220 million
OD. $2 million
OE. $2.20 million
With the 20 percent tax on luxury boats,
OA. the buyer pays all of the tax.
OB. the seller pays all of the tax.
OC. the buyer and the seller split the tax evenly.
O D. it is impossible to say how the tax is split between the buyer
and seller.
OE. the tax reduces the quantity of luxury boats sold to zero, so
there is no tax.
t
g
O
6
Oll
y
Selected:
none
&
7
U
O
*
8
O
▸
(
9
7
O
The supply of luxury boats is perfectly elastic, the demand for
luxury boats is unit elastic, and with no tax on luxury boats the
price is $2 million and 220 luxury boats a week are bought.
3.20-
2.80-
2.40-
2.00-
1.60-
88
Price (millions of dollars per boat)
176
220
Quantity (boats per week)
sss Draw only the nhierte enerified in the question
Delete Clear
"
)
0
132
p
D
+
$+tax
264
Next
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Q
SUS
bac
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