Who has the larger tax burden? Consumers (buyers) Producers (suppliers) The tax burdens are equal Why is the tax burden as you described in in the question above? Consumers are the ones paying the tax. Demand is less elastic than supply. Both supply and demand are perfectly elastic. Supply is less elastic than demand. Demand is more elastic than supply.

Who has the larger tax burden? Consumers (buyers) Producers (suppliers) The tax burdens are equal Why is the tax burden as you described in in the question above? Consumers are the ones paying the tax. Demand is less elastic than supply. Both supply and demand are perfectly elastic. Supply is less elastic than demand. Demand is more elastic than supply.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Doyle and Samphantharak (2008) find that when a 5% gas tax is implemented, prices consumers pay for gas increase by about 4%. What role does demand elasticity play in determining the size of this price change? That is, under what demand elasticity cases would the price change be closer to 5%, or closer to 0%? Illustrate and explain using supply-and-demand graph(s)..
2. The elasticity of demand for guitars is -2.0, and the elasticity of supply is 3.0. How much will the price of guitars change with a per-unit tax of $2?
Now assume the government raises the tax from $1.00 to $1.50. This causes sale to decline from 10,000 units to 5,000 units. a) calculate the price(tax) elasticity of demand. b) is it elastic, inelastic, or unit elastic? c) what happens to total tax revenue?
The side of the market with the relatively higher elasticity will face more of the tax burden. Select one: a. True b. False
A tax targeted to reduce consumption of a good by a specific quantity will raise the most revenue when: supply is inelastic and demand is elastic. supply is elastic and demand is inelastic. both supply and demand are elastic. both supply and demand are inelastic.
The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $40.60 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per bag) 88293828 8 8 8 8 8 8 180 100 140 120 100 20 Demand Tax Wedge Supply 100 150 200 200 300 350 400 450 500 QUANTITY (Bags of handbags)
Demand for a good is perfectly ELASTIC while supply is regularly shaped. Suppose the government taxes the good. Which of the following statements is true: A. The tax will create deadweight loss B. The tax will NOT create deadweight loss
Draw a diagram where sellers have to pay a $X tax to the Government on each unit that they sell. Then this tax is decreased to $Y. Draw a demand and supply diagram showing this tax reduction causing an increase in Government taxation revenue. Please provide a written explanation for your diagram and discuss its policy implications. ( maximum word limit: 250 words)
Suppose the government applies a specific tax to a good where the demand elasticity, E, is -1.4, and the supply elasticity, n, is 1.2. This good would not be an ideal good for the government to tax since demand is: A. inelastic and would raise much revenue B. elastic and would raise much revenue C. inelastic and would not raise much revenue D. elastic and would not raise much revenue what is the tax incidence on consumers? $?
When demand is more elastic than supply, demanders pay a smaller share of the tax and sellers pay a larger share of the tax. Select one: a. False b. True
QUESTION 5 When the wage was $15 per hour, a group of workers supplied 52 hours of work per week on average. The wage then increased to $25 per hour, and the same group of workers supplied 61 hours of work per week on average. What is the elasticity of labor supply for this group of workers? (please calculcate to 2 decimal places, make sure that you keep the sign correct)
Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity Price Buyers Pay Price Sellers Receive (Bottles of wine) (Dollars per bottle) (Dollars per bottle) Before Tax After Tax Using the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Tax Burden Elasticity (Dollars per bottle) Buyers Sellers The burden of the tax falls more heavily on the __elastic side of the market.