The government is considering levying a tax of $120 per unit on suppliers of either pickleball paddles or metro cards. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for pickleball paddles is shown by DP (on the first graph), and the demand for metro cards is shown by DM (on the second graph). Suppose the government taxes pickleball paddles. The following graph shows the annual supply and demand for this good. It also shows the supply curve (S+Tax) shifted up by the amount of the proposed tax ($120 per paddle). On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for pickleball paddles. Then use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax. (image is below) Instead, suppose the government taxes metro cards. The following graph shows the annual supply and demand for this good, as well as the supply curve shifted up by the amount of the proposed tax ($120 per card). On the following graph, do for metro cards the same thing you did previously on the graph for pickleball paddles. Use the green rectangle (triangle symbols) to shade the area that represents tax revenue for metro cards. Then, use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax. (image is below) Complete the following table with the tax revenue collected and deadweight loss caused by each of the tax proposals. If the Government Taxes... Tax Revenue Deadweight Loss (Dollars) (Dollars) Pickleball paddles at $120 per paddle Metro cards at $120 per card Suppose the government wants to tax the good that will generate more tax revenue at a lower welfare cost. In this case, it should tax _______ because, all else held constant, taxing a good with a relatively _______ elastic demand generates larger tax revenue and smaller deadweight loss.

The government is considering levying a tax of $120 per unit on suppliers of either pickleball paddles or metro cards. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for pickleball paddles is shown by DP (on the first graph), and the demand for metro cards is shown by DM (on the second graph). Suppose the government taxes pickleball paddles. The following graph shows the annual supply and demand for this good. It also shows the supply curve (S+Tax) shifted up by the amount of the proposed tax ($120 per paddle). On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for pickleball paddles. Then use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax. (image is below) Instead, suppose the government taxes metro cards. The following graph shows the annual supply and demand for this good, as well as the supply curve shifted up by the amount of the proposed tax ($120 per card). On the following graph, do for metro cards the same thing you did previously on the graph for pickleball paddles. Use the green rectangle (triangle symbols) to shade the area that represents tax revenue for metro cards. Then, use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax. (image is below) Complete the following table with the tax revenue collected and deadweight loss caused by each of the tax proposals. If the Government Taxes... Tax Revenue Deadweight Loss (Dollars) (Dollars) Pickleball paddles at $120 per paddle Metro cards at $120 per card Suppose the government wants to tax the good that will generate more tax revenue at a lower welfare cost. In this case, it should tax _ because, all else held constant, taxing a good with a relatively _ elastic demand generates larger tax revenue and smaller deadweight loss.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Cost Of Taxation

Section: Chapter Questions

Problem 9PA

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Suppose the government taxes pickleball paddles. The following graph shows the annual supply and demand for this good. It also shows the supply curve (S+Tax) shifted up by the amount of the proposed tax ($120 per paddle).

On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for pickleball paddles. Then use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax.

(image is below)

Instead, suppose the government taxes metro cards. The following graph shows the annual supply and demand for this good, as well as the supply curve shifted up by the amount of the proposed tax ($120 per card).

On the following graph, do for metro cards the same thing you did previously on the graph for pickleball paddles. Use the green rectangle (triangle symbols) to shade the area that represents tax revenue for metro cards. Then, use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax.

(image is below)

Complete the following table with the tax revenue collected and deadweight loss caused by each of the tax proposals.

If the Government Taxes...	Tax Revenue	Deadweight Loss
(Dollars)	(Dollars)
Pickleball paddles at $120 per paddle
Metro cards at $120 per card

Suppose the government wants to tax the good that will generate more tax revenue at a lower welfare cost. In this case, it should tax _______ because, all else held constant, taxing a good with a relatively _______ elastic demand generates larger tax revenue and smaller deadweight loss.

PRICE (Dollars per card)
240
220
200
180
160
140
120
100
80
60
40
20
0
0
S+Tax
Metro Cards Market
Supply
DM
50 100 150 200 250 300 350 400 450 500 550 600
QUANTITY (Cards)
1]*
Tax Revenue
Deadweight Loss

On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for pickleball paddles. Then use the
black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax.
PRICE (Dollars per paddle)
240
220
200
180
160
140 +
120
100
80
60
40
20
0
Pickleball Paddles Market
S+Tax
Supply
Dp
0 50 100 150 200 250 300 350 400 450 500 550 600
QUANTITY (Paddles)
Tax Revenue
Deadweight Loss
?

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