Microeconomics
10th Edition
ISBN: 9781259655500
Author: David C Colander
Publisher: McGraw-Hill Education
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Question
Chapter 7, Problem 11QE
To determine
Estimate the percentage of tax the demander and supplier will pay.
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2. The elasticity of demand for guitars is -2.0, and the elasticity of supply is 3.0. How much
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Suppose an economist estimates the price elasticity of demand for sugary drinks is -4.2, while its price elasticity of supply is 1.2.
If the government decides to impose a per-unit tax of $9 per can of sugary drinks sold, how would the market price of sugary drinks be affected? Show your calculation
The elasticity of demand for chocolate chip cookies is 0.6 and the
elasticity of supply for these cookies is 1.9. If a tax is imposed on
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consumers would pay more of the tax.
consumers would pay the entire tax because their demand is less
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Chapter 7 Solutions
Microeconomics
Ch. 7.1 - Prob. 1QCh. 7.1 - Prob. 2QCh. 7.1 - Prob. 3QCh. 7.1 - Prob. 4QCh. 7.1 - Prob. 5QCh. 7.1 - Prob. 6QCh. 7.1 - Prob. 7QCh. 7.1 - Prob. 8QCh. 7.1 - Prob. 9QCh. 7.1 - Prob. 10Q
Ch. 7 - Prob. 1QECh. 7 - Prob. 2QECh. 7 - How is elasticity related to the revenue from a...Ch. 7 - Prob. 4QECh. 7 - Prob. 5QECh. 7 - Prob. 6QECh. 7 - Prob. 7QECh. 7 - Prob. 8QECh. 7 - Prob. 9QECh. 7 - Prob. 10QECh. 7 - Prob. 11QECh. 7 - Prob. 12QECh. 7 - Prob. 13QECh. 7 - Prob. 14QECh. 7 - Prob. 15QECh. 7 - Prob. 16QECh. 7 - Prob. 17QECh. 7 - Prob. 18QECh. 7 - Prob. 19QECh. 7 - Prob. 20QECh. 7 - Prob. 21QECh. 7 - Prob. 22QECh. 7 - Prob. 1QAPCh. 7 - Prob. 2QAPCh. 7 - Prob. 3QAPCh. 7 - Prob. 4QAPCh. 7 - Prob. 5QAPCh. 7 - Prob. 1IPCh. 7 - Prob. 2IPCh. 7 - Prob. 3IPCh. 7 - Prob. 4IPCh. 7 - Prob. 5IPCh. 7 - Prob. 6IP
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- When the price of demand is high and the price elasticity is low the burden of a tax falls primarily onarrow_forwardSuppose in the market for cigarettes, the price elasticity of supply is 2.4 and the price elasticity of demand is −0.8. If an excise tax is imposed on sellers of cigarettes, then _____. a buyers and sellers will pay equal shares of the tax b buyers will pay a greater share of the tax than sellers will c buyers will pay the whole tax d sellers will pay a greater share of the tax than buyers will e sellers will pay the whole taxarrow_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_forward
- If elasticity of demand is greater than elasticity of supply, more tax incidence will be on who? A. Seller B. Buyerarrow_forwardHow do the relative elasticities of supply and demand determine tax or subsidy incidence?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 on the cigarette sellers. Who, buyers or sellers, would share a heavier tax burden? Explain your answers without calculation.arrow_forward
- The side of the market with the relatively higher elasticity will face more of the tax burden. Select one: a. True b. Falsearrow_forwardWith a tax of Rs4/unit,the price of the good rises from Rs5/unit to Rs9/unit. Which of the following statements is true a. Price elasticity of demand is equal to price elasticity of supply b. Demand for the product is perfectly elastic c. Price elasticity of demand is equal to infinity d. Demand for the product is perfectly inelasticarrow_forwardThe price elasticity of demand is -3, the price elasticity of supply is 1. The government imposes a per-unit tax of 80 Cents on the sale of a cup of coffee in paper cups. Compute how much of the 80 Cents per cup is actually borne by the consumer and how much is borne by the seller.arrow_forward
- Based on your knowledge of the price elasticity of demand, do you think the deadweight loss of a soda/junk-food tax would be relatively large or relatively small?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_forwardTRUE OR FALSE. If the price elasticity of demand is 2 while the price elasticity of supply is 2, the sellers can pass on to the consumers the 50% of the tax.arrow_forward
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