MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Chapter 17.W1, Problem 1Q
To determine
The person who will bear the burden of tax when the
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Suppose the supply curve for cars is more elastic than the demand curve for cars. If the government imposes a tax on car sellers, which party (buyers or sellers) will bear more of the tax burden? How will the tax burden change if the government imposed the tax on car buyers, rather than sellers?
Suppose that the supply of oil is elastic and demand for oil is inelastic. If the government taxes oil, who will bear most of the tax burden?
why do comsumers pay the tax on goods if the elasticity of demand is less than the elasticty of supply?
Chapter 17 Solutions
MICROECONOMICS
Ch. 17.1 - Prob. 1QCh. 17.1 - Prob. 2QCh. 17.1 - Prob. 3QCh. 17.1 - Prob. 4QCh. 17.1 - Prob. 5QCh. 17.1 - Prob. 6QCh. 17.1 - Prob. 7QCh. 17.1 - Prob. 8QCh. 17.1 - Prob. 9QCh. 17.1 - Prob. 10Q
Ch. 17.A - Prob. 1QECh. 17.A - Prob. 2QECh. 17.A - Prob. 3QECh. 17.A - Prob. 4QECh. 17.A - Prob. 5QECh. 17.A - Prob. 6QECh. 17.A - Prob. 7QECh. 17.A - Prob. 8QECh. 17.W - Prob. 1QECh. 17.W - Prob. 2QECh. 17.W - Prob. 3QECh. 17.W - Prob. 4QECh. 17.W - Prob. 5QECh. 17.W - Prob. 6QECh. 17.W - Prob. 7QECh. 17.W - Prob. 8QECh. 17.W - Prob. 9QECh. 17.W - Prob. 10QECh. 17.W - Prob. 1QAPCh. 17.W - Prob. 2QAPCh. 17.W - Prob. 3QAPCh. 17.W - Prob. 4QAPCh. 17.W - Prob. 5QAPCh. 17.W - Prob. 1IPCh. 17.W - Prob. 2IPCh. 17.W - Prob. 3IPCh. 17.W - Prob. 4IPCh. 17.W1 - Prob. 1QCh. 17.W1 - Prob. 2QCh. 17.W1 - Prob. 3QCh. 17.W1 - Prob. 4QCh. 17.W1 - Prob. 5QCh. 17.W1 - Prob. 6QCh. 17.W1 - Prob. 7QCh. 17.W1 - Prob. 8QCh. 17.W1 - Prob. 9QCh. 17.W1 - Prob. 10QCh. 17 - Prob. 1QECh. 17 - Prob. 2QECh. 17 - Prob. 3QECh. 17 - Prob. 4QECh. 17 - Prob. 5QECh. 17 - Prob. 6QECh. 17 - Prob. 7QECh. 17 - Prob. 8QECh. 17 - Prob. 9QECh. 17 - Prob. 10QECh. 17 - Prob. 11QECh. 17 - Prob. 12QECh. 17 - Prob. 13QECh. 17 - Prob. 14QECh. 17 - Prob. 15QECh. 17 - Prob. 16QECh. 17 - Prob. 17QECh. 17 - Prob. 18QECh. 17 - Prob. 19QECh. 17 - Prob. 20QECh. 17 - Prob. 21QECh. 17 - Prob. 22QECh. 17 - Prob. 23QECh. 17 - Prob. 24QECh. 17 - Prob. 25QECh. 17 - Prob. 26QECh. 17 - Prob. 1QAPCh. 17 - Prob. 2QAPCh. 17 - Prob. 3QAPCh. 17 - Prob. 4QAPCh. 17 - Prob. 5QAPCh. 17 - Prob. 6QAPCh. 17 - Prob. 1IPCh. 17 - Prob. 2IPCh. 17 - Prob. 3IPCh. 17 - Prob. 4IPCh. 17 - Prob. 5IPCh. 17 - Prob. 6IPCh. 17 - Prob. 7IPCh. 17 - Prob. 8IPCh. 17 - Prob. 9IPCh. 17 - Prob. 10IPCh. 17 - Prob. 11IP
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- The demand for beer is more elastic than the demand for milk. Would a tax on beer or a tax on milk have a larger deadweight loss? Why?arrow_forwardAt the current market equilibrium, the price elasticity of supply for a certain good is much lower than the price elasticity of demand. if the government imposes a $5 specific tax on this good, who will bear more of the burden of the tax?arrow_forwardSuppose producers bear most of the burden of a specific tax of 20 cents on staplers. Which ONE statement best describes the supply and demand for staplers? Suppose sandals have an elastic own-price elasticity of demand. If price goes up by 2%, then what happens to quantity demanded?arrow_forward
- Does a tax on buyers affect the demand curve?arrow_forwardWould consumer or producer carry the burden of tax if good is elastic? Show on a grapharrow_forwardAt the current market equilibrium, the price elasticity of demand for a certain good is much higher than the price elasticity of supply. If the government imposes a $2 specific tax on this good, who will bear more of the burden of the tax? Illustrate.arrow_forward
- Under which circumstances does the tax burden fall entirely on consumers?arrow_forwardSuppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.8 and 0.7 respectively. Suppose the government imposes a per-unit tax of $45 Some economists believe that a sales tax, in general, is undesirable. Explain. Despite this, why do most countries still impose a tax on cigarette? Explain plausible arguments.arrow_forwardDo you think profit could be maintained if the tax burden were simply passed on to the consumers in the form of higher selling price? How will this affect sales? Explain.arrow_forward
- Suppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.8 and 0.7 respectively. Suppose the government imposes a per-unit tax of $45 on the cigarette sellers. By how much would buyers share the tax burden respectively? Show your calculation.arrow_forwardSuppose the price elasticity of demand for smartphones is 0.5 (absolute value), while the price elasticity of supply is 1.9. If the government imposes a per-unit tax of $100 on the sellers of smartphones, how will the price and quantity transacted of smartphones change? Will the sellers or the buyers bear a larger tax burden? Will the market be able to achieve economic efficiency after the tax is imposed? Explain with a diagram.arrow_forwardConsider the market for BP gasoline. If the market has a very elastic supply and a very inelastic demand, how would the burden of a tax on BP gasoline be shared between producers and consumers? Draw a graph to support your answer.arrow_forward
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