MICROECONOMICS-ACCESS CARD <CUSTOM>
11th Edition
ISBN: 9781266285097
Author: Colander
Publisher: MCG CUSTOM
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Chapter 7, Problem 2QE
To determine
Explain decision-making.
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If a tax of $1.20 is imposed on consumers in this market, what is the tax revenue?
Under which circumstances does the tax burden fall entirely on consumers?
Suppose the price elasticity of demand for smartphones is 0.5 (absolute value), while the price elasticity of supply is 1.9. If the government imposes a per-unit tax of $100 on the sellers of smartphones, how will the price and quantity transacted of smartphones change? Will the sellers or the buyers bear a larger tax burden? Will the market be able to achieve economic efficiency after the tax is imposed? Explain with a diagram.
Chapter 7 Solutions
MICROECONOMICS-ACCESS CARD <CUSTOM>
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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- Who would pay a tax imposed on the supplier when the price elasticity of supply is inelastic and the price elasticity of demand is elastic?arrow_forwardUse the following graph to answer the question: how much is producer surplus? What is the total value to consumers of consuming the first ten units of this good?arrow_forwardLarry purchases a book for $10, and his consumer surplus is $3. How much is Larry willing to pay for the book?arrow_forward
- Define Consumer and Producer Surplus and illustrate them graphically.arrow_forwardGive some examples of products that are likely to have little if any producer surplus and explain why.arrow_forwardwhy do comsumers pay the tax on goods if the elasticity of demand is less than the elasticty of supply?arrow_forward
- What would happen if the government started regulating product prices, and how would that affect consumer behaviour?arrow_forwardI tried to graph in part 1 but I am unsure how I did. I would appreciate it if you can correct me and I don't understand part 2 3. Relationship between tax revenues, deadweight loss, and demand elasticity The government is considering levying a tax of $80 per unit on suppliers of either leather jackets or smartphones. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for leather jackets is shown by DLDL (on the first graph), and the demand for smartphones is shown by DSDS (on the second graph). Suppose the government taxes leather jackets. The following graph shows the annual supply and demand for this good. It also shows the supply curve (S+TaxS+Tax) shifted up by the amount of the proposed tax ($80 per jacket). On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for leather jackets. Then use the black triangle (plus symbols) to shade the area that…arrow_forwardCan you explain this for mearrow_forward
- Consumer surplus is equal to the difference betweenarrow_forwardWith the aid of a diagram, illustrate how to calculate consumer and producer surplus surplusarrow_forwardThe demand curve for cookies is downward sloping. When the price of cookies is $3.00, the quantity demanded is 100. If the price falls to $2.00 what happens to consumer surplus?arrow_forward
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