What happens to the budget line if the government applies a specific tax of $1 per gallon of gasoline but does not tax other goods (assuming that the consumer will still buy more than 10 gallons per week)? What happens to the budget line if the tax applies only to purchases of gasoline in excess of 10 gallons per week? 1.) Use the line drawing tool to draw a new budget constraint with the gasoline tax on all gallons of gasoline. Label this line 'L²¹. 2.) Use the multipoint curve drawing tool to draw the new budget constraint when the gasoline tax applies only to purchase of gasoline in excess of 10 gallons per week. Label this line 'L³¹. (Note: Be sure to draw the entire budget constraint, starting at a quantity of 0). Carefully follow the instructions above, and only draw the required objects. All other goods, Units per week o 10 Gasoline, Gallons per week After plotting the final point of your multipoint curve, press the Esc key on yo

What happens to the budget line if the government applies a specific tax of $1 per gallon of gasoline but does not tax other goods (assuming that the consumer will still buy more than 10 gallons per week)? What happens to the budget line if the tax applies only to purchases of gasoline in excess of 10 gallons per week? 1.) Use the line drawing tool to draw a new budget constraint with the gasoline tax on all gallons of gasoline. Label this line 'L²¹. 2.) Use the multipoint curve drawing tool to draw the new budget constraint when the gasoline tax applies only to purchase of gasoline in excess of 10 gallons per week. Label this line 'L³¹. (Note: Be sure to draw the entire budget constraint, starting at a quantity of 0). Carefully follow the instructions above, and only draw the required objects. All other goods, Units per week o 10 Gasoline, Gallons per week After plotting the final point of your multipoint curve, press the Esc key on yo

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 a local government votes to impose an excise tax of $1.00 per bottle on the sales of bottled water. (Assume that all bottles are identical and residents cannot shop elsewhere.) Before the tax the equilibrium price and quantity are $1.20 and 1900 bottles per day. After the tax is imposed, market equilibrium adjusts to a price of $1.80 and quantity of 1400 bottles per day. a. Draw the supply and demand diagram before and after the excise tax is imposed. 1.) Using the line drawing tool, plot the original and new supply curves and label the lines properly. 2.) Using the point drawing tool, indicate the original and new equilibrium points and label these points properly. Carefully follow the instructions above, and only draw the required objects. CH Price ($ per bottle) 3.00- 2.80- 2.60- 2.40- 2.20- 2.00- 1.80- 1.60- 1.40- 1.20- 1.00- 0.80- 0.60- 0.40- 0.20- 0.00 0 1000 2000 Quantity (bottles per day)
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: a. The new equilibrium quantity of soft drinks bought and sold would be ___________ million liters. b. The new equilibrium price paid by buyers of soft drinks would be $__________ per liter. c. The new equilibrium price received by sellers (after-tax) would be $__________ per liter.
9. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes when the tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $23.20 per pair, to be paid by the seller. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Hint: To see the impact of the tax, first enter the value of the tax in the Tax on Sellers field. Adjust the value in the price field to move the green line to the after-tax equilibrium so that quantity demanded equals quantity supplied. Graph Input Tool Market for Shoes 200 180 I Price (Dollars per pair) $100 160 Quantity Demanded (Pairs of shoes) Quantity Supplied (Pairs of shoes) Supply 250.00 250.00 140 120 100 Supply Shifter 80 Demand Tax on Sellers (Dollars per pair) 60 0.00 40 20 50 100 150 200 250…
1. Consider the following policies, each of which is aimed at reducing violent crime by reducing the use of guns. Illustrate by demand and supply diagrams followed with an explanation the effect of each of these proposed policies. [Hint: For each question, show the price paid by consumers, the price received by producers, and the quantity of guns sold, the difference between the price paid by consumers and the price received by producers, has the number of guns sold increased or decreased] A tax on gun buyers а. b. A tax on gun sellers A binding price floor on guns с. d. A tax on gun ammunition
1. Say that there are two goods in the world, books and video games. Say that we observed two of Jim's choices: he chooses bundle A from the budget set bounded by budget line 1, and the bundle B from the budget set bounded by budget line 2. video games B A budget line 2 budget line 1 books a) For each of the two goods, based on the diagram: is the good normal, inferior, or we can't say for sure? Is the good ordinary, Giffen, or we can't say for sure? Explain. b) For which of the two budget lines is the opportunity cost of a book higher and why? What does that statement mean in the context of this model?
3. If all other factors remain the same, what happens to the demand curve for coffee if there is: (a) an increase in the price of tea, (b) a decrease in family income, (c) an increase in the price of coffee? In answering these questions draw and carefully label a set of axes. On the horizontal axis of your graph, show the quantity of coffee. On the vertical axis show the price per cup of coffee. Since you do not have specific data on prices and quantities demanded, just indicate prices with a P and Quantity with a Q. Focus on the general shape and position of the curves before and after events occur. Draw new curves to show what happens in each of the circumstances given, if necessary. 3. If all other factors are unchanged, what happens to the supply curve for coffee if there is: (a) an increase in wages paid to coffee store clerks, (b) an increase in the price of coffee, or (c) an increase in the number of coffee stores? In answering these questions draw graphs, as necessary, using…
What is consumer surplus? Consumer surplus is the OA. price; its marginal benefit B. price; its value of a good in excess of OC. marginal benefit; the price paid for it D. value; its marginal benefit Question 1 of 27 > summed over the quantity bought. Suppose that the price of a cashmere sweater is $100 and Jean's marginal benefit from a cashmere sweater is $300. If Jean buys 1 cashmere sweater, what is her consumer surplus? Jean's consumer surplus is $
Nick brings $25 to a baseball game to spend on hot dogs and beer. The following diagram shows his budget constraint: 10 9. ВС 8. 7 BC 1 2 3 4 5 6 7 8 9 10 HOT DOGS According to the diagram, hot dogs cost $ each, and beer costs $ per glass. Adjust the diagram to show how Nick's budget constraint would change if he had brought more money to the ballpark. (Assume the prices of hot dogs and beer remain the same.) Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will 9, 4. 2. GLASSES OF BEER
(Figure: Determining Surplus and Loss) In the graph, which price would NOT allow for a binding price ceiling? 16 12 60 O 52 O S6 O SI0 Question 22 (Figure: Quarts of Milk and Jars of Honey 2) If the price of milk rises, the budget line will 400 350 200 Budget 10 Jars of honey O pivot from its intersection with the horizontal axis to have a flatter slope O pivot from its intersection with the horizontal axis to have a steeper alope. O pivot from its intersection with the vertical axis to have a flatter slope O dhift outward in a parallel manner. Quarts of milk
Suppose consumers buy 60 million packs of cigarettes per month at a price of $5 per pack. If a $2 tax is added to that price, Instructions: Enter your responses as a percentage rounded to one decimal place. a. By what percentage does the price change? percent
A controversial issue in managing climate change is the effect of taxes on gasoline. Higher taxes would reduce the after-tax price received by gasoline producers. The price elasticity of the supply of gasoline has been estimated to be 2.0.a. Explain why the price elasticity of supply is positive.b. Suppose that a tax on gasoline reduces the after-tax price of gasoline by 5%. By how much would suppliers reduce gasoline production?c. Compare the effect of the tax on gasoline in the short vis-à-vis long run.