Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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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?
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Chapter 6 Solutions
Principles of Microeconomics
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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_forwardWhat happens to the market equilibrium price and output when tax is imposed on the buyers? Is the burden fall only on buyers – Explainarrow_forward
- 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.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_forwardIf 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_forward
- Under which circumstances does the tax burden fall entirely on consumers?arrow_forwardThe 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_forward
- What is tax system? Define and explain in your own words.arrow_forwardWhen supply is perfectly elastic, who bears the burden of tax? Select one: a. producers b. consumers c. producers and consumers d. sellersarrow_forwardWould consumer or producer carry the burden of tax if good is inelastic? Show on a grapharrow_forward
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