Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN: 9781305156050
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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Congress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $ 0.50 tax for each gallon of gasoline sold. Should they impose this tax on producers or consumers? Explain carefully using a supply-and-demand diagram. If the demand for gasoline were more elastic, would this tax be more effective or less effective in reducing the quantity of gasoline consumed? Explain with both words and a diagram. Are consumers of gasoline helped or hurt by this tax? Why? Are workers in the oil industry helped or hurt by this tax ? Why ?
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.
The demand for salt is price inelastic and the supply of salt is price elastic. The demand for caviar is price elastic and the supply of caviar is price inelastic. Suppose that a tax of $1 per kilogram is levied on the sellers of salt and a tax of $1 per kilogram is levied on the buyers of caviar. Who would we expect to have to pay most of these taxes? Question 29Answer a. the sellers of salt and the sellers of caviar b. the buyers of salt and the buyers of caviar c. the sellers of salt and the buyers of caviar d. the buyers of salt and the sellers of caviar
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