Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 8.1, Problem 1QQ
To determine
The impact of tax on equilibrium price and quantity and deadweight loss .
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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.
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.
Does a tax on buyers affect the demand curve?
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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- Question 1 In the market for swim suits, demand is P = 58 - 0.011Q and supply is P = 5 + 0.009Q. The government imposes a tax of $2 per swim suit. Calculate the total surplus after the tax.arrow_forwardPlease answer all parts of the question and show your work.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
- Tax sellersarrow_forwardIf a tax of $1.20 is imposed on consumers in this market, what is the tax revenue?arrow_forwardThe demand and supply equations for a product are: Q^d=300-6p and Q^x=-40+6p. . Determine the market Equilibrium and draw graphs. Suppose that the government decides to impose a flat tax of 10% on each unit sold. Show that the price that consumers pay would be the same if the government imposed a tax of Rs. 1.70 per unit sold. Draw graph and explain . Also calculate the total revenue earned by sellers before and after the tax, the tax revenue raised by the government, changes in consumer and producers surplus and dead weight lossarrow_forward
- With the help of appropriate diagrams, explain how a tax can be used to reduce the consumption of a harmful product such as cigarettes.arrow_forward1. The equilibrium price of juice was initially $1.80 per bottle, and the equilibrium quantity was 8,000 bottles per day. When the government imposed a tax of $0.50 per bottle, the price went up to $2.18 per bottle, and quantity fell by 12%. A) How much of the tax (in $/bottle) are the buyers paying? B) How much of the tax (in $/bottle) is shouldered by the sellers? C) After the tax is imposed, how many bottles will be consumed?arrow_forwardThe graph shows market for printers at equilibrium at price of $100 and quantity of 100. Suppose government imposes a tax of $30 per printer on buyers of printer. After the tax is in effect: A. What is the Quantity exchanged in the market? B. What is the buyers' price? C. What is the sellers' Price? D. What is the incidence of Tax? E. Show the deadweight loss on your graph. You can draw the graph on paper and upload an image as a PNG, JPEG or PDF document. Please keep in mind that I can not open the files with HEIC extension. P 130 120 110 100 90 80 70 60 50 40 50 60 70 80 90 100 110 120 S D Qarrow_forward
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