Principles of Economics (MindTap Course List)
8th Edition
ISBN: 9781305585126
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 6, Problem 6CQQ
To determine
When the impact of tax is mainly on consumers.
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A sales tax will be divided so that buyers pay the full amount if
Select one:
a. supply is perfectly inelastic.
b. supply has unitary elasticity.
c. demand is perfectly inelastic.
d. demand has unitary elasticity.
A sales tax is imposed on good A. The supply of good A is not perfectly elastic or perfectly inelastic. Suppose that the demand for good A becomes more inelastic.
(a) Will the tax burden on sellers increase or decrease?
(b) Will the DWL increase or decrease?
Suppose that in Australia the price elasticity of steel demand of -1.5 and the price elasticity of steel supply is 1.2. If a tax of $50 per tonne of steel is applied, then:
a. The tax burden on consumers will be greater than the tax burden on suppliers.
b. The tax burden on suppliers will be greater than the tax burden on consumers.
c. The tax burden on consumers will be equal to the tax burden on suppliers.
d. The steel price is unlikely to be substantially affected.
Chapter 6 Solutions
Principles of Economics (MindTap Course List)
Ch. 6.1 - Prob. 1QQCh. 6.2 - Prob. 2QQCh. 6 - Prob. 1CQQCh. 6 - Prob. 2CQQCh. 6 - Prob. 3CQQCh. 6 - Prob. 4CQQCh. 6 - Prob. 5CQQCh. 6 - Prob. 6CQQCh. 6 - Prob. 1QRCh. 6 - Prob. 2QR
Ch. 6 - Prob. 3QRCh. 6 - Prob. 4QRCh. 6 - Prob. 5QRCh. 6 - Prob. 6QRCh. 6 - Prob. 7QRCh. 6 - Prob. 1PACh. 6 - Prob. 2PACh. 6 - Prob. 3PACh. 6 - Prob. 4PACh. 6 - Prob. 5PACh. 6 - Prob. 6PACh. 6 - Prob. 7PACh. 6 - A case study in this chapter discusses the federal...Ch. 6 - Prob. 9PACh. 6 - Prob. 10PA
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- Q28 NOT GRADED THIS IS A PRACTICE REVIEWarrow_forward1.The supply of meat is more elastic in the long run than in the short run. Ceteris paribus, as time goes by, the burden of a tax on cattle will be increasingly passed on to the: Group of answer choices Grocer Government Rancher Consumerarrow_forward14 K You are a policy maker who is interested in increasing tax revenues in order to reduce the Federal budget deficit. One proposal that has been suggested is increase excise taxes on certain goods. Some of the options suggested are: • vacation travel such as cruises • liquor and cigarettes • gasoline . theater and concert tickets Based on your knowledge of elasticity of demand, which items would you choose? Explain.arrow_forward
- Q Sea Aplia Homework: Elasticity of Demand and Supply The following graph shows the daily market for jeans when the tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $5.80 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then, enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool 50 Market for Jeans 45 I Quantity (Pairs of jeans) 50 40 Supply Demand Price (Dollars per pair) Supply Price (Dollars per pair) 75.00 17.00 35 30 25 Supply…arrow_forward6. The government decides to place a $6 unit tax on a product. The following elasticities are known: E, = - 1; E,= 2. By how much does the price paid by the demanders increase because of this tax?arrow_forwardCalculate, interpret and try to explain where applicable in each question, why the elasticities of demand for the following examples occur: a. The government announced an introduction of excise tax from R1 to R1.50 per bottle of beer. This increase results in an overall price increase from R9 to R10.50 per bottle to consumers. The expected tax revenue from this will be R30,000. Before the tax hike, 28,000 beers were sold. b. What will happen to the total revenue of soft drink companies if the elasticity of demand for soft drinks is higher than 1 and the price of soft drinks decreases? c. The quantity demanded of a popular magazine decreases from 10,000 copies to 6,000 per month after the publisher increased the price of a copy from R25 to R40. Total revenue from sales of a prescribed textbook on economics increased from R50,000 to R60,000 when the price of the book increased from R400 to R600 per book. Explain why.arrow_forward
- Don't use Ai and chatgpt. Answer in step by step with explanation.arrow_forwardThe government decides to reduce air pollution by reducing the use of petrol. It imposes £0.50 tax for each litre of petrol sold.a. Should it impose this tax on petrol companies or motorists? Explain carefully, using a supply and demand diagram. b. If the demand for petrol were more elastic, would this tax be more effective or less effective in reducing the quantity of petrol consumed? Explain with both words and a diagram.c. Are consumers of petrol helped or hurt by this tax? Why?d. Are workers in the oil industry helped orarrow_forwardSolve all this question......you will not solve all questions then I will give you down?? upvote...arrow_forward
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