The imposition of tax on a monopoly ’s product causes the price to rise proportionately less than the full extent of tax.

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Answer 1

Question

Chapter 14, Problem 14.10P

a)

To determine

To show: The imposition of tax on a monopoly’s product causes the price to rise proportionately less than the full extent of tax.

b)

To determine

To show:The imposition of tax on a monopoly’s product causes the price to rise proportionately equal to the tax amount when demand curve is a constant elastic curve.

c)

To determine

To describe: A situation where the imposition of tax on a monopoly’s product causes the price to rise proportionately more than the tax amount.

d)

To determine

To show:The differences in price and output due to the imposition of specific tax and ad-valorem tax on a monopoly’s product.

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Problema 4 (20 puntos): Supongamos que tenemos un ingreso de $120 y enfrentamos los precios P₁ =6 y P₂ =4. Nuestra función de utilidad es: U(x1, x2) = x0.4x0.6 a) Planteen el problema de optimización y obtengan las condiciones de primer orden. b) Encuentren el consumo óptimo de x1 y x2. c) ¿Cómo cambiará nuestra elección óptima si el ingreso aumenta a $180?

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Answer 2

Question

Chapter 14, Problem 14.10P

a)

To determine

To show: The imposition of tax on a monopoly’s product causes the price to rise proportionately less than the full extent of tax.

b)

To determine

To show:The imposition of tax on a monopoly’s product causes the price to rise proportionately equal to the tax amount when demand curve is a constant elastic curve.

c)

To determine

To describe: A situation where the imposition of tax on a monopoly’s product causes the price to rise proportionately more than the tax amount.

d)

To determine

To show:The differences in price and output due to the imposition of specific tax and ad-valorem tax on a monopoly’s product.

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Answer 3

Question

Chapter 14, Problem 14.10P

a)

To determine

To show: The imposition of tax on a monopoly’s product causes the price to rise proportionately less than the full extent of tax.

b)

To determine

To show:The imposition of tax on a monopoly’s product causes the price to rise proportionately equal to the tax amount when demand curve is a constant elastic curve.

c)

To determine

To describe: A situation where the imposition of tax on a monopoly’s product causes the price to rise proportionately more than the tax amount.

d)

To determine

To show:The differences in price and output due to the imposition of specific tax and ad-valorem tax on a monopoly’s product.

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Answer 4

Question

Chapter 14, Problem 14.10P

a)

To determine

To show: The imposition of tax on a monopoly’s product causes the price to rise proportionately less than the full extent of tax.

b)

To determine

To show:The imposition of tax on a monopoly’s product causes the price to rise proportionately equal to the tax amount when demand curve is a constant elastic curve.

c)

To determine

To describe: A situation where the imposition of tax on a monopoly’s product causes the price to rise proportionately more than the tax amount.

d)

To determine

To show:The differences in price and output due to the imposition of specific tax and ad-valorem tax on a monopoly’s product.

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Answer 5

Chapter 14, Problem 14.10P

a)

To determine

To show: The imposition of tax on a monopoly’s product causes the price to rise proportionately less than the full extent of tax.

b)

To determine

To show:The imposition of tax on a monopoly’s product causes the price to rise proportionately equal to the tax amount when demand curve is a constant elastic curve.

c)

To determine

To describe: A situation where the imposition of tax on a monopoly’s product causes the price to rise proportionately more than the tax amount.

d)

To determine

To show:The differences in price and output due to the imposition of specific tax and ad-valorem tax on a monopoly’s product.

Answer 6

Chapter 14, Problem 14.10P

a)

To determine

To show: The imposition of tax on a monopoly’s product causes the price to rise proportionately less than the full extent of tax.

Answer 7

Chapter 14, Problem 14.10P

a)

To determine

To show: The imposition of tax on a monopoly’s product causes the price to rise proportionately less than the full extent of tax.

Answer 8

b)

To determine

To show:The imposition of tax on a monopoly’s product causes the price to rise proportionately equal to the tax amount when demand curve is a constant elastic curve.

Answer 9

b)

To determine

To show:The imposition of tax on a monopoly’s product causes the price to rise proportionately equal to the tax amount when demand curve is a constant elastic curve.

Answer 10

c)

To determine

To describe: A situation where the imposition of tax on a monopoly’s product causes the price to rise proportionately more than the tax amount.

Answer 11

c)

To determine

To describe: A situation where the imposition of tax on a monopoly’s product causes the price to rise proportionately more than the tax amount.

Answer 12

d)

To determine

To show:The differences in price and output due to the imposition of specific tax and ad-valorem tax on a monopoly’s product.

Answer 13

d)

To determine

To show:The differences in price and output due to the imposition of specific tax and ad-valorem tax on a monopoly’s product.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 14 - Prob. 14.1P Ch. 14 - Prob. 14.2P Ch. 14 - Prob. 14.3P Ch. 14 - Suppose the market for Hula Hoops is monopolized...Ch. 14 - Prob. 14.5P Ch. 14 - Prob. 14.6P Ch. 14 - Prob. 14.7P Ch. 14 - Prob. 14.8P Ch. 14 - Prob. 14.9P Ch. 14 - Prob. 14.10P

The imposition of tax on a monopoly ’s product causes the price to rise proportionately less than the full extent of tax.

Solution Summary: The author explains the inverse elasticity rule given in equation 14.1: ad-valorem tax decreases the price of the product from P to P(1-t). Since demand curve is linear and marginal cost

To show: The imposition of tax on a monopoly’s product causes the price to rise proportionately less than the full extent of tax.

To show:The imposition of tax on a monopoly’s product causes the price to rise proportionately equal to the tax amount when demand curve is a constant elastic curve.

To describe: A situation where the imposition of tax on a monopoly’s product causes the price to rise proportionately more than the tax amount.

To show:The differences in price and output due to the imposition of specific tax and ad-valorem tax on a monopoly’s product.

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Chapter 14 Solutions