Microeconomics
Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Chapter 7, Problem 7QE
To determine

Explain if the government would prefer supply or demand to be more inelastic if they wanted to tax on good, when the suppliers were strong lobbyists.

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why do comsumers pay the tax on goods if the elasticity of demand is less than the elasticty of supply?
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.
Show what happens to the supply or demand curve in each of the following situations (only ONE curve will shift). Make sure to label all curves and markets, and show what happens to equilibrium price and quantity.   Given the market for SPAM, what would happen if there is an economic boom and incomes of most consumers increased.
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