Consider the figure in Question 1. Suppose instead the government decides to impose a specific (or fixed) tax of T per kg of salt, to be paid by the suppliers. Which of the following statements is correct? Consumers bear the entire tax burden. The tax raised is T*Q*. The supply curve shifts up in a parallel manner. The new equilibrium price is P*+T. The figure shows the demand and supply curves in the salt market. Price of salt p Market Supply Q" Market Demand Quantity of salt The government now decides to impose a sales tax of 30% on the price of salt, to be paid by the suppliers. Which of the following statements is correct? ° The supply curve shifts up in a parallel manner. The tax causes a decline in the quantity traded. The tax raised is 0.3(P**Q*). The new equilibrium price is 30% higher than P*. 0
Consider the figure in Question 1. Suppose instead the government decides to impose a specific (or fixed) tax of T per kg of salt, to be paid by the suppliers. Which of the following statements is correct? Consumers bear the entire tax burden. The tax raised is T*Q*. The supply curve shifts up in a parallel manner. The new equilibrium price is P*+T. The figure shows the demand and supply curves in the salt market. Price of salt p Market Supply Q" Market Demand Quantity of salt The government now decides to impose a sales tax of 30% on the price of salt, to be paid by the suppliers. Which of the following statements is correct? ° The supply curve shifts up in a parallel manner. The tax causes a decline in the quantity traded. The tax raised is 0.3(P**Q*). The new equilibrium price is 30% higher than P*. 0
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter3: Demand And Supply
Section: Chapter Questions
Problem 16RQ: What is the relationship between quantity Demanded and quantity supplied at equilibrium? What is the...
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Transcribed Image Text:Consider the figure in Question 1. Suppose instead the government decides to impose a
specific (or fixed) tax of T per kg of salt, to be paid by the suppliers. Which of the following
statements is correct?
Consumers bear the entire tax burden.
The tax raised is T*Q*.
The supply curve shifts up in a parallel manner.
The new equilibrium price is P*+T.
Transcribed Image Text:The figure shows the demand and supply curves in the salt market.
Price
of salt
p
Market
Supply
Q"
Market
Demand
Quantity of salt
The government now decides to impose a sales tax of 30% on the price of salt, to be paid by
the suppliers. Which of the following statements is correct?
°
The supply curve shifts up in a parallel manner.
The tax causes a decline in the quantity traded.
The tax raised is 0.3(P**Q*).
The new equilibrium price is 30% higher than P*.
0
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