Answered: Using the above graph, answer the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

a. Using the above graph, answer the following questions.

     i. What were the equilibrium price and quantity in this market before the tax?
    ii. What is the amount of the tax?
   iii. How much of the tax will the buyers pay?
   iv. How much of the tax will the sellers pay?
    v. How much will the buyer pay for the product after the tax is imposed?
   vi. How much will the seller receive after the tax is imposed?
vii. As a result of the tax, what has happened to the level of market activity?

b. Suppose that, in order to raise tax revenue and reduce the consumption of cannabis, the Ontario government increased the tax on cannabis sales. One year after introducing the tax, the government found that the tax was most effective in reducing cannabis sales among young people but did not have a significant effect on others. What can this information tell you about the demand curves for young people and other adults, and who will bear the burden of the tax?

Question 36
Price
$12
10-
8-
6-m
2
Tax-
4
6
8
00
$
D
10 12 14 16 Quantity
(in thousands)

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