QUESTION 1: TAXATIONSuppose that the government of China decided to impose a per unit tax on the suppliers of salt.a) Using a supply and demand model, show and explain the impact that the per-unit tax had on the equilibrium price and quantity of salt.b) Using the diagram created for your answer to (a), show and explain what effect the per unit tax had on consumer surplus, producer surplus and deadweight loss.c) List three reasons a government may impose a tax. Discuss the link between government revenue from taxation and elasticity of demand. QUESTION 1: TAXATIONSuppose that the government of China decided to impose a per unit tax onthe suppliers of salt.a) Using a supply and demand model, show and explain the impact thatthe per-unit tax had on the equilibrium price and quantity of salt.b) Using the diagram created for your answer to (a), show and explainwhat effect the per unit tax had on consumer surplus, producer surplusand deadweight loss.c) List three reasons a government may impose a tax. Discuss the linkbetween government revenue from taxation and elasticity of demand.

A per unit tax is a type of tax that is applied to each unit of a good or service that is sold. This…

Answered: ) Using a supply and demand model, show…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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QUESTION 1: TAXATION Suppose that the government of China decided to impose a per unit tax on the suppliers of salt. a) Using a supply and demand model, show and explain the impact that the per-unit tax had on the equilibrium price and quantity of salt. b) Using the diagram created for your answer to (a), show and explain what effect the per unit tax had on consumer surplus, producer surplus and deadweight loss. c) List three reasons a government may impose a tax. Discuss the link between government revenue from taxation and elasticity of demand.

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