EBK MACROECONOMICS
EBK MACROECONOMICS
10th Edition
ISBN: 9781259662447
Author: Colander
Publisher: YUZU
Question
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Chapter 5, Problem 13QE

(a)

To determine

Equilibrium price and quantity.

(b)

To determine

Equilibrium price and quantity with a unit tax.

(c)

To determine

Equilibrium price and quantity with a unit tax on consumers.

(d)

To determine

Impact of the tax levied on different groups.

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Students have asked these similar questions
Draw the supply and demand curves associated with the table below. Price Qs Qd $0.00 50 200 0.50 100 175 1.00 150 150 1.50 200 125 2.00 250 100 (a) What is equilibrium price and quantity? (b) What is equilibrium price and quantity with a $0.75 per-unit tax levied on suppliers? Demonstrate your answer graphically. (c) How does your answer to b change if the tax were levied on consumers, not suppliers? Demonstrate your answer graphically. (d) What conclusion can you draw about the difference between levying a tax on suppliers and consumers?
Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.25 per fountain drink. Which of the following statements is correct? a. The price paid by buyers is $0.25 per drink more than it was before the tax. b. This tax causes the supply curve for fountain drinks to shift downward by $0.50 at each quantity. c. This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. d. Forty percent of the burden of the tax falls on buyers.
C). Suppose that the equilibrium price for this product is $4 and the equilibrium quantity is 100 units. If the government imposes a price floor of $5 what happens? Draw the new graph explaining how quantities are affected by that decision. D). Now, consider that the government imposes a tax of $0.50 on sellers. Show what happens to the initial equilibrium price of $4 and draw the new quantity on the graph. E). The government imposes a tax of $0.50 on buyers. Show what happens to the initial equilibrium price of $4 and draw the new quantity on the graph. F). Explain how the burden of the two different taxes (as seen in C and D, above) is divided between buyers and sellers. G). If you are a buyer in these cases, would you prefer a relatively elastic or inelastic demand curve compared to the supply curve? Why? H). If you are a seller in these cases, would you prefer a relatively elastic or inelastic supply curve compared to the demand curve? Why
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