Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 8, Problem 4QR
To determine
Reason for economists disagree with the impact of labor taxes and
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In which of these scenarios is the deadweight
loss of the tax largest?
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Due to imposing a sugar tax, who would likely suffer a greater share of the deadweight loss – the consumer or producer? Explain.
Consider the market below where the government has imposed a $12 excise tax on this
product.
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What area on the graph represents the total amount of DEADWEIGHT LOSS that results from
the imposition of the tax?
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Essentials of Economics (MindTap Course List)
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- The demand for beer is more elastic than the demand for milk. Would a tax on beer or a tax on milk have a larger deadweight loss? Why?arrow_forwardif deadweight loss is $24,000 under a tax of $4 per unit, what is deadweight loss under a tax of $2 per unit?arrow_forwardBased 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_forward
- Name three types of taxes and analyze the deadweight loss of each.arrow_forwardIllustrate, with the use of an appropriate figure, what the deadweight loss from the imposition of a sugary tax would look like.arrow_forwardif the government doubled the tax on gasoline,can you be sure that revenue from the gasoline tax will rise ? can you be sure that the deadweight loss from the gasoline tax will rise?arrow_forward
- Suppose there is only one movie theatre in a town and the equilibrium price and quantity for movie admissions is $7 and 940 visits per week. Now suppose the government imposes a tax of $3 per movie admission, and thenew equilibrium price and quantity are $8.75 and 750 visits per week. What is the direct burden of this tax?arrow_forwardThe market demand for super-sticky glue is Q = 340 - 6P and the market supply is Q= 340 + 2P. a. Calculate the deadweight loss of a tax of GHS4 levied on producers of super-sticky glue. per unit b. How does deadweight ioss change if the tax is levied on consumers of super-sticky glue?arrow_forwardSuppose demand for good X is given by QD = 900- p/2 where p is the price and QD the quantity demanded. Supply is given by QS = p/4.Suppose 60 TL tax is imposed on each unit of X that is purchased.What is the burden of the tax? Explain the key factors that determine the incidence of the tax.arrow_forward
- Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss? The greater are the price elasticities of supply and demand, the greater is the deadweight loss. The greater is the price elasticity of supply and the smaller is the price elasticity of demand, the greater is the deadweight loss. The smaller are the decreases in quantity demanded and quantity supplied, the greater the deadweight loss. The smaller is the wedge between the effective price to sellers and the effective price to buyers, the greater is the deadweight loss.arrow_forwardConsider the market for BP gasoline. If the market has a very elastic supply and a very inelastic demand, how would the burden of a tax on BP gasoline be shared between producers and consumers? Draw a graph to support your answer.arrow_forwardSuppose there is only one movie theatre in a town and the equilibrium price and quantity for movie admissions is 7 TL and 940 visits per week. Now suppose the government imposes a tax of 3 TL per movie admission, and the new equilibrium price and quantity are 8.75 TL and 750 visits per week. What is the total burden of this tax?arrow_forward
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