When assessing the welfare effects of taxes, we can conclude that They are always welfare increasing, because they allow the government to provide essential goods They are usually welfare decreasing in the market in which they are raised, but for society as a whole it depends on how they are used They are always welfare decreasing They are welfare neutral, because whatever is lost by producers and consumers goes instead to the government and therefore is just a reallocation of money

When assessing the welfare effects of taxes, we can conclude that They are always welfare increasing, because they allow the government to provide essential goods They are usually welfare decreasing in the market in which they are raised, but for society as a whole it depends on how they are used They are always welfare decreasing They are welfare neutral, because whatever is lost by producers and consumers goes instead to the government and therefore is just a reallocation of money

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7. Effect of a tax on buyers and sellers The following graph shows the daily market for wine. Suppose the government institutes a tax of $40.60 per bottle. This places a wedge between the price buyers pay and the price sellers receive. 200 180 160 Demand Supply 140 120 100 Tax Wedge 60 40 20 100 200 00 400 500 B00 00 1000 00 QUANTITY (Botles of wine) PRICE (Dolars per bottle)
How does lowering the tax change the gap between the price paid by buyers and the price received by sellers? By lowering the tax, the price paid by buyers quantity the price paid by sellers and the market equilibrium A. falls; falls; decreases B. falls; rises; increases C. rises; rises: increases D. rises; falls; decreases
Homework: Supply and Demand: An Initial Look 9. Effect of a tax on buyers and sellers The following graph shows the daily market for jeans when the tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $5.80 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. PRICE (Dollars per pair). 2 2 2 2 2 2 2 2 no 50 45 40 35 30 25 20 15 10 5 Demand Supply 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Pairs of jeans) Graph Input Tool Market for Jeans. Price (Dollars per pair) Quantity Demanded…
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Suppose that the local government of Santa Fe decides to institute a tax on soda consumers. Before the tax, 45,000 liters of soda were sold every week at a price of $10 per liter. After the tax, 38,000 liters of soda are sold every week; consumers pay $14 per liter (including the tax), and producers receive $8 per liter. The amount of the tax on a liter of soda is 3 that falls on producers is 5 per liter. True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. True per liter. Of this amount, the burden that falls on consumers is 3 O False per liter, and the burden
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Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss? The greater are the price elasticities of supply and demand, the greater is the deadweight loss. The greater is the price elasticity of supply and the smaller is the price elasticity of demand, the greater is the deadweight loss. The smaller are the decreases in quantity demanded and quantity supplied, the greater the deadweight loss. The smaller is the wedge between the effective price to sellers and the effective price to buyers, the greater is the deadweight loss.
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A proportional tax, sometimes referred to as a flat tax, is a kind of income tax wherein all taxpayers are taxed at the same percentage rate, no matter how high or low their income. A proportional tax system means that everyone experiences the same tax rate, whether low, middle, or high-income. Those who support a proportional tax argue that the system is fairest because the rules are simple and straightforward and no one is exempt; however, there is a huge con of proprtional taxes. Explain what that is. Essay
Suppose that Carson earns $80,000 per year. Now suppose that he must pay income taxes according to the tax schedule shown below. Income $0 to $7,000 $7,001 to $40,000 $40,001 to $75,000 $75,001 to $142,000 Over $142,000 Instructions: Enter your answers rounded to the nearest whole number a. According to the table, what type of income tax does Carson face? (Click to select) b. Assume that Carson has no tax exemptions or deductions. How much in income taxes must Carson pay? $ What is Carson's marginal tax rate? percent Tax Rate (%) 15 15 15 15 15 What is his average tax rate? percent A
Subsidies, unlike taxes, tend to increase the quantities of goods and/or services traded and consumers tend to pay a lower price for the good. From this perspective, the benefits for consumers are evident, while the effects for producers are not so conclusive. In this context, what would be the effect(s) that subsidies have on producers?I. Subsidies positively affect the quantity supplied, but the producer must pay the subsidy.II. Market prices increase.III. Producers increase the quantity offered, but the price they charge is the one that corresponds according to their supply function.Select one:a. II and IIIb. III onlyc. I, II and IIId. I and IIIe. I only
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