Principles of Economics (MindTap Course List)
8th Edition
ISBN: 9781305585126
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 6, Problem 7PA
Sub part (a):
To determine
The impact of tax on the gasoline to reduce air-pollution.
Sub part (b):
To determine
The impact of tax on the gasoline to reduce air-pollution.
Sub part (c):
To determine
The impact of tax on the gasoline to reduce air-pollution.
Sub part (d):
To determine
The impact of tax on the gasoline to reduce air-pollution.
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The 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 or
41. The Government decides that it is time to reduce air pollution by reducing the usage of gasoline. They impose a 1000 VND tax on each liter of gasoline sold.
a.Should they impose this tax on producers or consumers? Explain carefully using a supply-and-demand diagram.
b.If the demand for gasoline were more elastic, would this tax be more effective or less effective in reducing the quantity of gasoline consumed? Illustrate your answers with a diagram.
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.
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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- 1. The equilibrium price of juice was initially $1.80 per bottle, and the equilibrium quantity was 8,000 bottles per day. When the government imposed a tax of $0.50 per bottle, the price went up to $2.18 per bottle, and quantity fell by 12%. A) How much of the tax (in $/bottle) are the buyers paying? B) How much of the tax (in $/bottle) is shouldered by the sellers? C) After the tax is imposed, how many bottles will be consumed?arrow_forwardUnder pressure from nutrition activists, the government decides to tax sugar producers with a $5 tax per 100 pound bag. Using the graph, draw the new supply curve. After the tax is enacted, what price will bring forth quantities of 10,000? 15,000? 20,000? B: $ Price (per 100 pound bag) Quantity A: $ 10,000 B 15,000 C 20,000 C: S Supply and Demand: End of Chapter Problem In Sucrosia, the supply curve for sugar is presented in both the graph and the table. Price of sugar 80 75 70 65 60 55 35 30 15 10 22222222222225040 ° 5 Supply of sugar 15 20 20 10 Quantity of sugar (000s) 25 Price Quantity (per 100 pound bag) $30 10,000 $50 15,000 $70 20,000arrow_forwardSuppose a local government votes to impose an excise tax of $0.90 per bottle on the sales of bottled water. (Assume that all bottles are identical and residents cannot shop elsewhere.) Before the tax the equilibrium price and quantity are $1.20 and 2000 bottles per day. After the tax is imposed, market equilibrium adjusts to a price of $1.70 and quantity of 1300 bottles per day. a. Draw the supply and demand diagram before and after the excise tax is imposed. 1.) Using the line drawing tool, plot the original and new supply curves and label the lines properly. 2.) Using the point drawing tool, indicate the original and new equilibrium points and label these points properly. Carefully follow the instructions above, and only draw the required objects. Price ($ per bottle) 3.00 2.80- 2.60- 2.40- 2.20- 2.00- 1.80- 1.60- 1.40- 1.20- 1.00- 0.80- 0.60- 0.40- 0.20- 0.00+ 0 1000 2000 Quantity (bottles per day) 10 3000arrow_forward
- Solve this attachment.arrow_forwardI want the answerarrow_forwardSuppose a local government votes to impose an excise tax of $1.00 per bottle on the sales of bottled water. (Assume that all bottles are identical and residents cannot shop elsewhere.) Before the tax the equilibrium price and quantity are $1.20 and 1900 bottles per day. After the tax is imposed, market equilibrium adjusts to a price of $1.80 and quantity of 1400 bottles per day. a. Draw the supply and demand diagram before and after the excise tax is imposed. 1.) Using the line drawing tool, plot the original and new supply curves and label the lines properly. 2.) Using the point drawing tool, indicate the original and new equilibrium points and label these points properly. Carefully follow the instructions above, and only draw the required objects. CH Price ($ per bottle) 3.00- 2.80- 2.60- 2.40- 2.20- 2.00- 1.80- 1.60- 1.40- 1.20- 1.00- 0.80- 0.60- 0.40- 0.20- 0.00 0 1000 2000 Quantity (bottles per day)arrow_forward
- The following graph shows the market for the long-distance bus rides. In the absence of taxes, the equilibrium price of a ride is $5 and the equilibrium quantity is 10 million rides. Suppose that regulator levies an excise tax on bus service providers. The amount of excise tax equals $2 per ride. How much will buyers pay for a bus ticket after the tax is imposed? $4.50 $6 $5.50 $5arrow_forwardA controversial issue in managing climate change is the effect of taxes on gasoline. Higher taxes would reduce the after-tax price received by gasoline producers. The price elasticity of the supply of gasoline has been estimated to be 2.0.a. Explain why the price elasticity of supply is positive.b. Suppose that a tax on gasoline reduces the after-tax price of gasoline by 5%. By how much would suppliers reduce gasoline production?c. Compare the effect of the tax on gasoline in the short vis-à-vis long run.arrow_forwardThe following graph shows the market for the long-distance bus rides. In the absence of taxes, the equilibrium price of a ride is $5 and the equilibrium quantity is 10 million rides. Suppose that regulator levies an excise tax on bus service providers. The amount of excise tax equals $2 per ride. How many rides will be demanded after the introduction of the excise tax? 7 million 10 million 8 million 9 millionarrow_forward
- We discussed rent control in class this semester. When there is rent control in the market for housing, we expect the supply of rental housing to be more elastic in the long run than in the short run. Which of the following is true based on the above statement about rent control and the supply of rental housing? a. In the short run, there will be a large deadweight loss from rent control. However, the deadweight loss becomes smaller in the long run. b. The supply is inelastic in the short run because it is difficult to build lots of new housing units in a small amount of time. c. Rent control is never binding. d. The number of rental housing decreases in the short run but increases in the long run. e. None of the above.arrow_forwardThe following graph shows the market for the long-distance bus rides. In the absence of taxes, the equilibrium price of a ride is $5 and the equilibrium quantity is 10 million rides. Suppose that regulator levies an excise tax on bus service providers. The amount of excise tax equals $2 per ride. Calculate the amount of dead-weight loss resulting from this tax. $4 million $0.5 million $1 million $2 millionarrow_forwardHand written solutions are strictly prohibited.arrow_forward
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