Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 6, Problem 6QR
To determine
The impact of a tax on buyers, sellers and price level in the economy.
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How does a tax on a good affect the price paid by buyers, price receive by sellers, and the quantity sold?
How does a tax on buyers affect the market equilibrium?
How does a tax on sellers affect the market equilibrium?
Chapter 6 Solutions
Principles of Microeconomics
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- The current market price of bananas is $1 per pound. Use a graph and words to show the effect of a ten cent tax on each pound of bananas. Insert your own numbers into your graph. Be sure to indicate the new price paid by consumers, the new price received by sellers, and the new quantity sold.arrow_forwardHow does government intervention in the prices of groceries affect the equilibrium of supply and demand in the market?arrow_forwardThe Indian government places a Rs. 1,000 tax on smart phones, will the price paid by consumers raise by more than Rs. 1,000, less than Rs. 1,000 or exactly Rs. 1,000? Explain.arrow_forward
- What effect does a per-gallon tax on gasoline have on the market for gasoline? Who pays for the increase in tax?arrow_forwardIn 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_forwardCan you explain this for mearrow_forward
- The Government places a luxury tax on cars that sell for over $50k. What would happen to the supply of Bentleys?arrow_forwardHow does a tax on a good affect the price paid bybuyers, the price received by sellers, and the quantitysold?arrow_forwardThe government taxes both clothing and tobacco. For a similarly sized tax, would you expect the quantity demanded of clothing or tobacco to be more affected?arrow_forward
- how does this impact the demandarrow_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 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 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_forward
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