Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter P2, Problem 10KC
To determine
The impact when the demand curve is more elastic than the supply curve.
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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
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.
The reason which determines the elasticity of tax burden on buyers and sellers.
When supply is perfectly elastic, who bears the burden of tax?
Select one:
a. producers
b. consumers
c. producers and consumers
d. sellers
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- Solve all this question......you will not solve all questions then I will give you down?? upvote......arrow_forwardIf elasticity of demand is greater than elasticity of supply, more tax incidence will be on who? A. Seller B. Buyerarrow_forwardWould consumer or producer carry the burden of tax if good is elastic? Show on a grapharrow_forward
- Identify whether the statements about the economics of taxes are true or false. a. An excise tax can distort incentives and create missed opportunities for mutually beneficial transactions. b. When demand is elastic and supply is inelastic, the burden of a tax falls mainly on consumers. c. When demand is inelastic and supply is elastic, the burden of a tax falls mainly on producers. d. The incidence of a tax is determined by which group – buyers or sellers – must actually pay the govarrow_forwardQuestion 6 When a tax per unit is placed on the buyer of a good: a the equilibrium price falls and the total amount spent by the buyer decreases if demand is elastic. b when prices increase from the tax, the supply increases because of the higher price. c the buyer and seller share the burden of the tax with the seller receiving relatively less and the buyer paying relatively more. d the seller charges all of the tax to the buyer since the tax was not placed on the seller.arrow_forwardAssume that the demand for coal is more elastic than the supply. A tax on coal will a. increase the price of coal paid by buyers, and sellers bear a smaller burden of the tax b. decrease the price of coal that sellers really get, and sellers have to bear a bigger burden of the tax c. decrease the price of coal paid by buyers, and buyers have to bear a bigger burden of the tax d. increase the price of coal that sellers really get, and buyers bear a smaller burden of the taxarrow_forward
- Suppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.6 and 0.8 respectively. a. Suppose the government imposes a per-unit tax on the cigarette sellers. Who, buyers or sellers, would share a heavier tax burden? Explain your answers without calculation. b. Suppose the government imposes a per-unit tax of $40 on the cigarette sellers. By how much would buyers and sellers of cigarettes share the tax burden respectively? Show your calculation. c. Suppose many small sellers, such as newsstands, complain the heavy tax burden borne by them. Would it be better to these small sellers if the government decides to impose a $20 per-unit tax on both the buyers and the sellers of cigarette? Explain.arrow_forwardA tax on umbrellas will most likely Select one: a.cause a large decline in the sales of umbrellas because demand is elastic. b.be an effective way to tax those who don’t earn enough to pay income taxes. c.fall mostly on the umbrella buyers rather than the producers. d.raise large amounts of tax revenue for the government.arrow_forward2. The elasticity of demand for guitars is -2.0, and the elasticity of supply is 3.0. How much will the price of guitars change with a per-unit tax of $2?arrow_forward
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