To raise money for a new student union, the Student Snack2.25Bar charges a tax of $0.75 on each beverage. In the graph,Demand(500, $2.00)2.00the original demand curve for beverages is labeled(700, $1.75)1.75"Demand" and the shifted demand curve, which accounts for1.50the tax, is labeled "Shifted Demand." Use this graph toShifted demand(500, S1.25)1.25answer the questions. Answer to the nearest cent.00For each soda, how much of the tax does the Student Snack0.75Bar pay?0.50-Supply0.251.75100 200 300 400 500 600 700 800 900QuantityFor each beverage, how much of the tax do students pay?1.75($) aoud

The equilibrium in the market is obtained at the intersection of the demand curve and the supply…

Answered: To raise money for a new student union,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Some consumption goods tend to have price insensitive demand. An example of inelastic demand is groceries. Other goods have elastic demand. An example of elastic demand is vacation homes. If the government is interested in placing the highest tax burden on firms, which good should they tax? Groceries All of the above Vacation homes.
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).
Suppose an economist estimates the price elasticity of demand for sugary drinks is -4.2, while its price elasticity of supply is 1.2. If the government decides to impose a per-unit tax of $9 per can of sugary drinks sold, how would the market price of sugary drinks be affected? Show your calculation
7. Effect of a tax on buyers and sellers The following graph shows the daily market for jeans. Suppose the government institutes a tax of $46.40 per pair. This places a wedge between the price buyers pay and the price sellers receive. (?) 200 180 160 Supply 140 120 Tax Wedge 100 80 60 40 20 Demand 50 100 150 200 250 300 350 400 450 500 QUANTITY (Pairs of jeans) PRICE (Dollars per pair)
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. q4- Has the government revenue increased or decreased? Explain the change using the concept of elasticity.
Consider the market for BP gasoline. If the market has a very elastic supply and a very inelastic demand, how would the burden of a tax on BP gasoline be shared between producers and consumers? Draw a graph to support your answer.
Assume the state of Alaska placed a tax on playing cards of 7 cents per pack. If the state generated $42630 in revenue, how many packs of cards were sold?
Suppose Via Rail asked government authorities for permission to increase its commuter rates by 20 percent. The railroad argued that declining revenues made this rate increase essential. Opponents of the rate increase contended that the railroad's revenues would fall because of the rate hike. It can be concluded that: both groups felt that the demand was elastic but for different reasons. both groups felt that the demand was inelastic but for different reasons. the railroad felt that the demand for passenger service was inelastic and opponents of the rate increase felt it was elastic. the railroad felt that the demand for passenger service was elastic and opponents of the rate increase felt it was inelastic.
Tax revenue is likely to fall due to a higher tax rate if the elasticity of demand is 0.2 and the elasticity of supply is
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)..
Question 4 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 legal tax burden (incidence) on producers (after tax t* is imposed). (Enter your answer to one integer. For "8", you would write 8).
How does elasticity affect the burden of a tax? (max: 4 sentences)

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