Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 6, Problem 6PA
To determine
The impact of $500 tax on luxury cars.
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The Government places a luxury tax on cars that sell for over $50k. What would happen to the supply of Bentleys?
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Chapter 6 Solutions
Principles of Microeconomics
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- In a country the Government determines to increase the tax on gasoline by $0.20 per gallon. The price of gasoline after taxes though only goes up by $0.15. Does this mean the gas station is not collecting the correct amount of taxes?arrow_forwardIf cigarettes and marijuana had been found to be substitutes, what would a tax placed on cigarettes do? decrease the demand for marijuana increase the demand for marijuana decrease the quantity demanded of marijuana increase the quantity demanded of marijuanaarrow_forwardThe current price for a good is $20, and 90 units are demanded at that price. The price elasticity of demand for the good is - 2. When the price of the good drops by 5 percent to $19, consumer surplus increases by $. (Enter your response to the nearest penny.)arrow_forward
- The current price for a good is $20, and 90 units are demanded at that price. The price elasticity of demand for the good is - 2. (Enter your response to the nearest penny.) When the price of the good drops by 10 percent to $18, consumer surplus increases by $arrow_forwardWhat is the change in total revenue for business travelers when the price increases to $500?arrow_forwardPrice of X Quantity Demanded of X $10 6000 $14 3000 Price of X Quantity Supplied of X $10 2400 $14 3000 Cross price elasticity of demand of X and Y 0.55 Income elasticity of demand of X 1.1 Is the good likely to be perceived as a necessity or a luxury by most consumers? How did you determine this? Who will pay more of the tax on the good: buyers or sellers? How did you determine this? Is it likely that the good takes a very long time to produce? How did you determine this? If the firm wishes to raise revenue, should it raise or lower prices? How did you determine this?arrow_forward
- e) Would you expect the own-price elasticity of demand to be higher for financial-aid students or for non-aid students (and does it depend on whether "own price" is gross tuition or net tuition?)? Why? What about the income elasticity?arrow_forwardDemand increases or decreases?and drawingarrow_forwardinstead of a decrease and it was an increase instead of a decrease; would that mean that the demand would increase and will result in a increase in demand for electric guitars?arrow_forward
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