Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 8, Problem 9PA
Subpart (a):
To determine
The impact of tax on the market for hotel rooms.
Sub part (b):
To determine
The impact of tax on the market for hotel rooms.
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Subject:eco
The elasticity of demand for maracas is –2.0, and the elasticity of supply is 3.0. How much will the price of maracas change with a per-unit tax of $1? Who bears the larger burden of the tax, consumers or producers?
Suppose 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.
Can you explain with graphs as well please
Chapter 8 Solutions
Principles of Microeconomics
Ch. 8.1 - Prob. 1QQCh. 8.2 - The demand for beer is more elastic than the...Ch. 8.3 - Prob. 3QQCh. 8 - Prob. 1CQQCh. 8 - Prob. 2CQQCh. 8 - Prob. 3CQQCh. 8 - Prob. 4CQQCh. 8 - Prob. 5CQQCh. 8 - Prob. 6CQQCh. 8 - Prob. 1QR
Ch. 8 - Prob. 2QRCh. 8 - Prob. 3QRCh. 8 - Why do experts disagree about whether labor taxes...Ch. 8 - What happens to the deadweight loss and tax...Ch. 8 - Prob. 1PACh. 8 - Prob. 2PACh. 8 - Prob. 3PACh. 8 - Prob. 4PACh. 8 - Prob. 5PACh. 8 - Prob. 6PACh. 8 - Prob. 7PACh. 8 - Prob. 8PACh. 8 - Prob. 9PACh. 8 - Prob. 10PA
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- Help me with part by drawing graph pleasearrow_forwardIf the government quadruples the amount of tax on gasoline, can you be sure that revenue fromg asoline tax will rise? Can you be sure that the deadweight loss from the gasoline tax will rise? Explain. (Hint: Incorporate graphs)arrow_forwardSuppose 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.arrow_forward
- 6. The government decides to place a $6 unit tax on a product. The following elasticities are known: E, = - 1; E,= 2. By how much does the price paid by the demanders increase because of this tax?arrow_forwardQuestion 14 In the long run, both supply and demand tend to become more elastic. This suggests that, in the long run, the government will likely reduce tax rates. deadweight loss from a tax will be less than it is in the short run. deadweight loss from a tax will be greater than it is in the short run. deadweight loss from a tax will be zero. O revenue generated from the tax will increase.arrow_forwardDaniel Patrick Moynihan, the late senator from New York, once introduced a bill that would levy a 10,000 percent tax on certain hollow-tipped bullets. A 10,000 percent tax on bullet ___ is not/is___ likely to generate a lot of revenue. Why might Senator Moynihan have proposed it? To boost the manufacturing industry of hollow-tipped bulletsTo raise revenue to support law enforcementTo discourage the use of hollow-tipped bulletsarrow_forward
- Suppose 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 on the cigarette sellers. By how much would buyers share the tax burden respectively? Show your calculation.arrow_forwardExercise 4 The government has imposed a new tax on all airline travel. The market has two types of travelers: business and leisure. Business travelers have a price elasticity of demand of -1.2, leisure travelers have a price elasticity of demand equal to -3.0. Airlines can price discriminate between these two groups (i.e. charge different prices to each type). Which type of traveler will bear the larger burden of the tax. Explain.arrow_forward5. The market demand for super-sticky glue is Q = 240 - 6P and the market supply is Q = -60 + 4P. a.Calculate the deadweight loss of a tax of S4 per unit levied on producers of super- sticky glue. b. How does deadweight loss change if the tax is levied on consumers of supersticky glue?arrow_forward
- Assume that the elasticity of demand for fanta is -0.8 while the elasticity of supply is 0.4. What is the pass-through fraction of a tax on fanta to consumers? B. Assuming a tax of K12 is applied on each bottle of fanta, how much of this will be borne by producers. C. If the original price was K30, what would be the new equilibrium price?arrow_forwardQuestion 25 Suppose that the demand for insulin is perfectly inelastic with respect to price. If a tax of $3 per vial of insulin sold, then price would: fall, but by less than $3, and there would be some reduction in the quantity bought and sold. rise by the full $3, and there could definitely be a reduction in the quantity bought and sold. rise, but by less than $3, and there would be some reduction in the quantity bought and sold. rise by the full $3, but there would be no reduction in the quantity bought and sold. rise, but by less than $3, and there would be no reduction in the quantity bought and sold.arrow_forwardQuestion 1 The demand for chicken wings is more elastic than the demand for razor blades. Suppose the government levies an equivalent tax on chicken wings and razor blades. The deadweight loss would be larger in the market for a- chicken wings than in the market for razor blades because the quantity of chicken wings would fall by more than the quantity of razor blades. b- razor blades than in the market for chicken wings because the quantity of chicken wings would fall by more than the quantity of razor blades. c- chicken wings than in the market for razor blades because the quantity of razor blades would fall by more than the quantity of chicken wings. d- razor blades than in the market for chicken wings because the quantity of razor blades would fall by more than the quantity of chicken wings.arrow_forward
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