Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 6, Problem 5PA
To determine
The impact of payroll tax on workers and firms.
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On a graph of the labor market, show the effects of an increase in the payroll tax.
A senator wants to raise tax revenue and makes worker better off.a staff member proposes raising the payroll tax paid by firms and using part of the extra revenue to reduce the payroll tax paid by workers.would this accomplis the senator's goal?Explain.
The following graph represents the demand and supply for blinkies (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario.
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Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.
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Essentials of Economics (MindTap Course List)
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- 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 on the cigarette sellers. Who, buyers or sellers, would share a heavier tax burden? Explain your answers without calculation.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 on the cigarette sellers. By how much would buyers share the tax burden respectively? Show your calculation.arrow_forwardHow does a Tax on Production affect a negatively sloped Demand curve or the Supply Curve? The supply curve shifts to the Left The supply curve shifts to the Right There is no shift, only movement along the Supply Curve The demand curve shifts to the leftarrow_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 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_forwardSuppose 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?arrow_forwardThe following graph represents the demand and supply for blinkies (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. Demand Supply QUANTITY (Binkies) 18 QUANTITY (Blinkies) Complete the following table, given the information presented on the graph. Result Value Price consumers pay before tax Per-unit tax S S Equilibrium quantity before tax In the following table, indicate which areas on the previous graph correspond to each concept. Check all that apply. Concept A B C D E F Consumer surplus before the tax is imposed ☐ ☐ ☐ ☐ Producer surplus after the tax is imposed O ☐ ☐ D 0 Tax revenue after the tax is imposed D ☐ ☐ 0 Grade It Now Save & Continuearrow_forward
- How does a tax on a good affect the price paid by buyers, price receive by sellers, and the quantity sold?arrow_forwardParliament is interested in financing the cost of their proposed childcare programme by imposing a payroll tax on workers. Some members of parliament are worried that workers will pay the entire burden of this payroll tax and propose for this tax to be imposed on firms. Address the concerns of the members of the Parliament in your report (100 words)arrow_forwardDraw 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)arrow_forward
- If a tax of $0.90 is imposed, what is the tax revenue?arrow_forwardThe market for soft drinks is perfectly competitive. Assume that the supply of soft drinks is point elastic and upward sloping. The government imposes a consumer tax on soft drinks. If point elasticity of demand is inelastic, is the deadweight loss generated by the tax higher or lower relative to where the point elasticity of demand is elastic? Explain why.arrow_forwardThe local government decides to impose a sales tax on some selected items. On item X the final prices increases almost the full amount of the tax, demand does not change much and the tax revenues collected are quite high. On item Y the price increases very little but demand falls quite a bit and very little tax revenue is collected. Is this a violation of the law of demand or something else? Explain.arrow_forward
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