USes a tax of S0.60 per soft drink purchased. The price paid by the consumer becomes = b) Refer to Figure 2. Suppose the government imposes a tax of $0.60 per soft drink purchased. The after-tax price received by the seller becomes = c) Refer to Figure 2. Suppose the government imposes a tax of $0.60 per soft drink purchased. The government total tax revenue from sales of soft drinks is = d) Refer to Figure 2. Suppose the government imposes a tax of $0.60 per soft drink purchased. When it comes to the economic incidence, who is bearing the tax burden, buyers, or sellers? Explain using actual numbers. Figure 2 3.00 2.80 2.60 2.40 t=0.60 2.20 + 2.00 1.80 + --- 1.60 1.40 + 1.20 1.00 + .80 .60 + .40 .20 100 200 300 400 500 600 700 800 900 1000 1100 1200 (DOLL) (91 Price ($) 1.

USes a tax of S0.60 per soft drink purchased. The price paid by the consumer becomes = b) Refer to Figure 2. Suppose the government imposes a tax of $0.60 per soft drink purchased. The after-tax price received by the seller becomes = c) Refer to Figure 2. Suppose the government imposes a tax of $0.60 per soft drink purchased. The government total tax revenue from sales of soft drinks is = d) Refer to Figure 2. Suppose the government imposes a tax of $0.60 per soft drink purchased. When it comes to the economic incidence, who is bearing the tax burden, buyers, or sellers? Explain using actual numbers. Figure 2 3.00 2.80 2.60 2.40 t=0.60 2.20 + 2.00 1.80 + --- 1.60 1.40 + 1.20 1.00 + .80 .60 + .40 .20 100 200 300 400 500 600 700 800 900 1000 1100 1200 (DOLL) (91 Price ($) 1.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose demand is D and supply is S0 so that equilibrium price is $10. If an excise tax of $6 is imposed on this product, what happens to the equilibrium price paid by consumers? The price received by producers? The number of units sold?Equilibrium price paid by consumers: $ Price received by producers: $ Number of units sold:
Case II: Attached is a graph diagram depicting the market for soft drinks. If an excise tax equal to $1 per liter is levied on soft drink sellers, please answer the following questions: 1. Buyers would spend a total of $____________ million on soft drinks. 2. Sellers would receive a total of $____________ million (after-tax) from selling soft drinks. 3. The government revenue from this tax would be $_____________ million.
In the diagram to the right, illustrating a per-unit tax equal to P2 minus P3, tax revenue is represented by the areas excess burden of the tax is represented by areas D and E F and G E and G D and F and the D F B E "G C A D Q2 Q₁ Quantity (millions per year) S₂ S₁
The figure below shows that the imposition of an indirect tax shifts the supply curve to the left. What is the total tax revenue received by the government? Pick a,b,c, or d a. $300 b. $500 c. $650 d. $200
As shown in Exhibit 3-10, assume the government places a $1 per pack sales tax on cigarettes. The percentage of the burden of taxation paid by consumers of a pack of cigarettes is:
The demand function D(p) = 200 - 4p and supply function is S(p)= 6p1. Find the equilibrium price and quantity2. If government collect $10 unit tax from each product, find the equilibrium demand and supplyprices.3. How much tax revenue is collected?4. What is the deadweight loss amount as a result of taxation?
(a) The supply and demand equations for a good are p-2q = 1 and p+ 2q = 9, respectively. Find the equilibrium price and quantity. A percentage [of the price] tax of 100r% is imposed. Find the new equilibrium price and quantity. What fraction of the tax paid has been passed onto the consumer? (b) If an asset is purchased at some initial time t = 0 for $200 and sold at some time t > 0 in the future, the value of the sale is given by P(t) = (2t² + 14t+200)e-¹/10, dollars. Find the stationary points of P(t) and determine their nature. Should the asset be purchased and, if so, when is the best time to sell it? [Hint: The fact that e> 2.7 may be useful.]
If the demand for automobiles is price elastic and an excise tax is levied on sellers of automobiles that causes a 10% increase in the price of automobiles paid by buyers, then: The quantity demanded of automobiles will decrease by more than 10% and buyers will bear a proportionally larger share of the direct burden of the tax than sellers. The quantity demanded of automobiles will decrease by more than 10% and sellers will bear a proportionally larger share of the direct burden of the tax than buyers. The quantity demanded of automobiles will decrease by less than10% and total revenues from auto sales will increase. The quantity demanded of automobiles will decrease by less than 10% and total revenues from auto sales will decrease.
If the burden of a tax on sugary drinks is borne mostly by consumers, it must be the case that: a) The demand for sugary drinks is much less elastic than their supply. b) Both the demand for, and the supply of, sugary drinks is inelastic. c) Both the demand for, and the supply of, sugary drinks is elastic. d) The demand for sugary drinks is much more elastic than their supply.
4. Suppose a market has the following supply and demand equations: QD = 380 - 10P and Q = 80 + 5P. If the goveosment imposes a specific tax t on the producers, find the value of tax t that maximizes the tax revenue
Suppose the government of Country X would like to reduce traffic congestion by imposing a per-unit tax on car sellers. а. With the aid of a well-labeled demand-and-supply diagram, explain the effects of the per-unit sales tax on the car market in Country X, and the tax incidence. b. Many car sellers complain about the heavy tax burden of the per-unit sales tax. To address the complains of the car sellers, the government of Country X proposes the tax to be levied on car buyers instead of car sellers. Under what condition will the sellers bear a larger tax burden than buyers? Explain whether the new proposal can successfully reduce the tax burden of car sellers.
Question 2: Imposing a single-stage tax Assume that there are 1000 importers and manufacturers, 2,000 wholesalers, and 10,000 retailers. Each manufacturer (importer) has sales of $30,000,000 which is sold equally across wholesalers, and wholesalers put a 20% markup on the price before selling to retailers Then the goods are resold equally to 10,000 retailers and the retailers impose a 25% markup on it. Suppose the government needs to raise 4.5 billion with a single- stage sales tax, a. What would be the rate of tax the government needs to impose on the sales of importers and manufacturers to achieve the revenue target. b. What would be the rate of tax the government needs to impose on the sales of wholesalers to achieve the revenue target?