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 7QR
To determine
The reason which determines the elasticity of tax burden on buyers and sellers.
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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?
What determines whether the buyer or seller pays the bulk of the tax?
What will the federal government do to taxes?
Chapter 6 Solutions
Principles of Macroeconomics, Loose-Leaf Version
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- How does a tax on a good affect the price paid bybuyers, the price received by sellers, and the quantitysold?arrow_forwardHow can the government improve tax collections without imposing much tax to the consumer?arrow_forwardIf a $1000 tax were imposed in this market, what would be the price that consumers would pay?arrow_forward
- What happens to the market equilibrium price and output when tax is imposed on the buyers? Is the burden fall only on buyers – Explainarrow_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_forwardThe tax on cigarettes in New York City is one of the highest in the nation—$5.85 per pack. What are some of the secondary effects of this tax? Check all that apply.arrow_forward
- If the government wants to raise tax revenue, which of the following items are good candidates for an excise tax? Choose one or more: A. toilet paper B. automobile tires C. cigarettes D. sweet potatoesarrow_forwardDo you think profit could be maintained if the tax burden were simply passed on to the consumers in the form of higher selling price? How will this affect sales? Explain.arrow_forwardUnder which circumstances does the tax burden fall entirely on consumers?arrow_forward
- The reason which determines the elasticity of tax burden on buyers and sellers.arrow_forwardIf the government imposes a tax of 8% on luxury cars that the consumer must pay, why does the consumer not actually pay the full 8%? How is it determined how much the consumer will pay and how much the producer will pay? Is it possible for an 8% tax the government imposes on the consumer to actually have 1% paid by the consumer and 7% by the producer? Why or why not?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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