arent tax cUL Suppose the governments of two very similar economies, economy Y and economy 2, implement a per spending in economy Y is more sensitive to changes in the interest rate than investment spending in economy Z. The economies are otherwise completely identical. The tax cut will have a larger impact on aggregate demand in the economy with the

arent tax cUL Suppose the governments of two very similar economies, economy Y and economy 2, implement a per spending in economy Y is more sensitive to changes in the interest rate than investment spending in economy Z. The economies are otherwise completely identical. The tax cut will have a larger impact on aggregate demand in the economy with the

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

Problem 2PA

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How does tax affect AE line? Draw graphs to explain
Consider the supply and demand functions graphed below. Р Demand Supply 20 50 80 100 Download the figure. Suppose a demand-side tax is imposed. As a result of the tax, the new equilibrium quantity is 50. What is the price paid by consumers? What is the price paid by producers? How much is the tax that was imposed? How much tax revenue is collected? Which side of the market pays more of the tax? This side of the market pays more of the tax because 10 LO 21 GA GA
After the excise tax is imposed, what is the new equilibrium quantity of sofas? d. What is the total amount of revenue collected by the government from the excise tax on sofas?
How would I solve this question?: suppose demand for cigarettes is inelastic and supply of cigarettes is elastic. Who would bear the larger share of the burden of a tax placed on cigarettes? Include supply and demand diagram that depicts situation
what happens in supply and demand when there is decrease in income tax but also an increase in sales tax draw the possible graph or graphs
1. Suppose the federal government requires beer drinkers to pay a $2 tax on each case of beer purchased. a. Now draw a supply-and-demand diagram for the beer market with the tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. b. What is the difference between the price paid by consumers and the price received by producers? c. Has the quantity of beer sold increased or decreased? Can you identify any government revenues?
4. Effect of a tax on buyers and sellers The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $40.60 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per bag) 200 180 160 140 120 100 80 60 40 20 0 Demand 0 50 Tax Wedge Supply ++ 100 150 200 250 300 350 QUANTITY (Baas of handbags) 400 450 500 ?
6. Effect of a tax on buyers and sellers The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $11.60 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. 45 40 10 S Tax Wedge Demand Supply 30 40 50 60 70 80 100 QUANTITY (Bags of handbags) Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity (Bags of handbags) Price Buyers Pay (Dollars per bag) Price Sellers Receive (Dollars per bag) Before Tax After Tax Using your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Buyers Sellers Tax Burden (Dollars per bag) Elasticity The tax burden falls more heavily on the side of the market…
7. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes. Suppose the government institutes a tax of $23.20 per pair. This places a wedge between the price buyers pay and the price sellers receive. PRICE (Dolars per pair) 100 90 0 0 Before Tax After Tax 100 200 Buyers Sellers W 420, 70 Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax Quantity Price Buyers Pay (Pairs of shoes) (Dollars per pair) Price Sellers Receive (Dollars per pair) Supply Derrand 400 500 600 300 000 600 QUANTITY(as of show) Using the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Tax Burden (Dollars per pair) Elasticity The burden of the tax falls more heavily on the eastic side of the…
Supposed the government requires beer drinkers to pay P100 per case of beer purchased. a. Draw a supply and demand diagram of the market for beer without tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. What is the difference between the price paid by the consumers and the price paid by the producers?
equm Ans Question 10 Explain how the introduction of the commodity tax T formally paid by consumers affects the market demand and market supply (you need to explain how the supply curve andor demand curve change after the introduction of the commodity tax!. BIEE E
Refer to the interactive below: Tax Burden II. GRAPH O SETTINGS Tax Burden Off Reset ($) Price Tax imposed on: Supply Demand 90 $90.00 Excise Tax (0 - $20) 0.00 80 70 Demand 60 Perfectly Relatively Inelastic Elastic Relatively Elastic 50 $50.00 40 Supply Less Perfectly 30 Elastic Elastic Perfectly Elastic 20 D 10 CALCULATIONS 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 Quantity (thousands per week) Price Paid Quantity No Tax $50.00 4,000 With Tax $50.00 Instructions: Adjust the sliders so that the vertical intercept of the supply curve is $20 and the demand curve is perfectly inelastic. Click the Tax Burden switch above the graph to On. Make additional modifications to the interactive tool as indicated to answer the following questions. a) If there is no tax, the equilibrium price is $50. If a $15 tax paid on sellers is implemented, the buyer will pay $ burden of the tax (Click to select) and the b) Suppose the supply curve gradually changed to become more elastic with the original equilibrium…