Principles of Macroeconomics, Loose-Leaf Version
8th Edition
ISBN: 9781337096881
Author: Mankiw, N. Gregory
Publisher: South-Western College Pub
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Chapter 6, Problem 6CQQ
To determine
When the impact of tax is mainly on consumers.
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When a good is taxed, the burden of the tax fallsmainly on consumers ifa. the tax is levied on consumers.b. the tax is levied on producers.c. supply is inelastic and demand is elastic.d. supply is elastic and demand is inelastic
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?
Chapter 6 Solutions
Principles of Macroeconomics, Loose-Leaf Version
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- I want the answerarrow_forward1. An example of a market where supply and demand are both inelastic. 2. An example of a market where both supply and demand are both elastic. 3. An example of a market where supply is inelastic and demand is elastic. 4. An example of a market where supply is elastic and deman is inelastic.arrow_forwardQuestion You are in the business of producing and selling popcorn, cheese, crackers, and wine. The government plans to impose a tax on one of these products. Based on the elasticities in the table provided, as a profit-minded business person, which good would you (the business owner) most prefer to have taxed? Price elasticity Price elasticity of supply of demand Popcorn 1.2 2.0 Cheese 2.2 1.1 Crackers 1.6 1.3 Wine 1.7 1.8 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Cheese b. Crackers Рорсоrn Winearrow_forward
- If buyers pay more of a tax than do the sellers اختر أحد الخيارات a. demand is more elastic than supply O .b. supply is more elastic than demand O C. None of the above answers is correct O .d. the equilibrium price paid by buyers rises by less than half the amount of the tax „e. the amount of tax revenue collected by the government is almost zeroarrow_forwardNeither the demand nor the supply of automobiles is perfectly elastic or inelastic. If the government imposes a $1,000 tax on automobiles, then the price of an automobile buyers pay اختر أحد الخيارات .a. does not change .b. increases by $1,000 O .C. decreases by $1,000 .d. increases by less than $1,000 .e. increases by more than $1,000arrow_forwardWhich of the following statements about the relationship between elasticity and tax incidence are true ? Choose one or more:A. A tax on a good for which both demand and supply are relatively inelastic will cause a relatively large transfer of welfare from consumers and producers to the government. B.The incidence of a tax depends on who the tax is placed on. C.If a tax is imposed on a good with a perfectly inelastic demand, then consumers bear the full incidence of the tax. D.When demand is more inelastic than supply, producers bear more of the incidence of a tax. E.When demand is more inelastic than supply, consumers bear more of the incidence of a tax.arrow_forward
- Q28 NOT GRADED THIS IS A PRACTICE REVIEWarrow_forward1. What is the relationship between total revenue and own-price elasticity of demand? 2. Illustrate a situation when the producer of a good will have a greater tax incidence than a consumer.What does elasticity have to do with tax incidence?arrow_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_forward
- 7.04 Review Suppose a tax of $20 is placed on televisions. If this market's supply and demand curves' are elastic, the burden of this tax falls on: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the sellers b the buyers both the sellers and the buyers.arrow_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_forwardWhen supply is perfectly elastic, who bears the burden of tax? Select one: a. producers b. consumers c. producers and consumers d. sellersarrow_forward
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