Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 6, Problem 7QR
To determine
The reason which determines the elasticity of tax burden on buyers and sellers.
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How does a tax on a good affect the price paid by buyers, price receive by sellers, and the quantity sold?
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What determines whether the buyer or seller pays the bulk of the tax?
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Principles of Microeconomics (MindTap Course List)
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- How does a tax on a good affect the price paid bybuyers, the price received by sellers, and the quantitysold?arrow_forwardWhat happens to a country's economy if there is a high tax for the company that earns more in that country?arrow_forwardHow can the government improve tax collections without imposing much tax to the consumer?arrow_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 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.arrow_forwardWhat happens to the market equilibrium price and output when tax is imposed on the buyers? Is the burden fall only on buyers – Explainarrow_forwardThe tax on cigarettes in New York City is one of the highest in the nation—$5.85 per pack. What are some of the secondary effects of this tax? Check all that apply.arrow_forward
- Do you think profit could be maintained if the tax burden were simply passed on to the consumers in the form of higher selling price? How will this affect sales? Explain.arrow_forwardIf the government wants to raise tax revenue, which of the following items are good candidates for an excise tax? Choose one or more: A. toilet paper B. automobile tires C. cigarettes D. sweet potatoesarrow_forwardIf a tax of 75¢ a cup is introduced, what is the price of a cup of coffee and how much coffee is bought? Who pays the tax?arrow_forward
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