Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 8, Problem 1QR
To determine
The impact of tax on
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What happens to consumer and producer surplus when the sale of a good is taxed? How does the change in consumer and producer surplus compare to the tax revenue? Cite Examples and Explain
How does a tax on a good affect the price paid by buyers, price receive by sellers, and the quantity sold?
If a tax of $0.90 is imposed, what is the tax revenue?
Chapter 8 Solutions
Essentials of Economics (MindTap Course List)
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- What happens to consumer and producer surpluswhen the sale of a good is taxed? How does thechange in consumer and producer surplus compareto the tax revenue? Explainarrow_forwardIf after a tax is imposed, the price paid by the buyer rises by $3 while the price received by the seller falls by $2, and the quantity of goods sold falls from 300 to 200 units, what is the amount of government revenue from this tax?arrow_forwardExplain conceptually how part of a tax comes out of consumer surplus, while some comes out of producer surplus. How is this distinct from how much consumers lose to deadweight loss?arrow_forward
- What happens to consumer and producer surplus when the sale of a good is taxed? How doesthe change in consumer and producer surplus compare to the situation when good is not taxed?Explain with the help of graphs.arrow_forwardHow can the government improve tax collections without imposing much tax to the consumer?arrow_forwardPrice (dollars per case) $33.25 27 22 20 Tax 50 90 Supply with tax Supply Demand Quantity (thousands of cases) The figure shows the market for beer. The government plans to impose a per-unit tax in this market. How much is the excess burden?arrow_forward
- . Draw a diagram to show the effect of a tax on producers. Show one demand curve and two supply curves (one before and one after the tax). Show the old and new prices and quantities. Use shading to show who gets the different parts of the surplus and indicate if there is any deadweight loss. Comment on implications for tax policy.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_forwardDraw a diagram to show the effect of a tax on producers. Show one demand curve and two supply curves (one before and one after the tax). Show the old and new prices and quantities.Use shading to show who gets the different parts of the surplus and indicate if there is any deadweight loss. Comment on implications for tax policy. Draw a diagram to show the effect of a tax on producers. Show one demand curve and two supply curves (one before and one after the tax). Show the old and new prices and quantities.Use shading to show who gets the different parts of the surplus and indicate if there is any deadweight loss. Comment on implications for tax policy.arrow_forward
- At the current market equilibrium, price is $17 and quantity is 50. A tax of 25% is imposed, after which the price paid by consumers including the tax is $20 and the new equilibrium quantity is 40. Sketch a figure illustrating the equilibrium before and after the tax. Calculate tax revenue, the producer burden, the consumer burden, and the excess burden. Label each.arrow_forwardwhat are the ultimate effects to society of shortfalls of tax collection?arrow_forwardDiscuss how the Imposition of taxes enhance supply, demand and government policies in an economyarrow_forward
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