5. Calculating tax incidence Suppose that the local government of Santa Fe decides to institute a tax on seltzer consumers. Before the tax, 20,000 packs of seltzer were sold ever week at a price of $11 per pack. After the tax, 14,000 packs of seltzer are sold every week; consumers pay $14 per pack (including the tax), and producers receive $7 per pack. The amount of the tax on a pack of seltzer is $ burden that falls on producers is $ True per pack. True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. O False per pack. Of this amount, the burden that falls on consumers is $ per pack, and the

5. Calculating tax incidence Suppose that the local government of Santa Fe decides to institute a tax on seltzer consumers. Before the tax, 20,000 packs of seltzer were sold ever week at a price of $11 per pack. After the tax, 14,000 packs of seltzer are sold every week; consumers pay $14 per pack (including the tax), and producers receive $7 per pack. The amount of the tax on a pack of seltzer is $ burden that falls on producers is $ True per pack. True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. O False per pack. Of this amount, the burden that falls on consumers is $ per pack, and the

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 7PA

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Similar questions

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Describe the general appearance of a demand or a supply curve with infinite elasticity.
In a market where the supply curve is perfectly inelastic how does an excise tax affect the price paid by consumers and the quantity bought and sold?
5. Calculating tax incidence Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 10,000 cases of cola were sold every week at a price of $4 per case. After the tax, 4,000 cases of cola are sold every week; consumers pay $7 per case, and producers receive $1 per case (after paying the tax).
When airfares between Santa Rosa and Los Angeles averages $69, the quantity consumed is 42,500 tickets. One day, an airline tax is levied equal to $10.00 and output falls to 37,000 tickets. Assume that air travelers end up paying 75% of the tax. Calculate the price elasticity of demand and & interpret coefficient. Use the general formula, not the mid point formula Calculate the price elasticity of supply and interpret coefficient. Use the general formula, not the mid point formula. How do total sales in the airline market before and after the tax support your answer in (n) and/or (o)?
1. Please explain what would happen to the market-clearing prices and quantities of e- cigarettes in the U.S. under the following hypothetical scenarios. b. The federal government imposed a $1 per pack excise tax on cigarettes.
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The table below presents the annual market for sofas in Akron, Ohio. Suppose the state government imposes a $250 excise tax on every sofa sold to be paid by customers at the point of sale. Market for Sofas Price (dollars) $1,240 1,180 1,120 1,060 1,000 940 880 820 760 780 Quantity of Sofas Demanded INO 200 230 260 290 320 350 380 410 449 M 470 Quantity of Sofas Supplied 300 TYGO 280 260 240 220 200 sofas 180 160 140 120 Quantity of Sofas Demanded with Excise Tax 50 80 118 140 WACH178 200 230 260 290 320 Instructions: Enter your answers as a whole number. a. Before the excise tax is imposed, what are the equilibrium price and quantity of sofas in Akron? b. Including the excise tax, what is the new equilibrium price consumers pay for sofas after the tax is imposed? $ c. After the excise tax is imposed, what is the new equilibrium quantity of sofas? sofas d. What is the total amount of revenue collected by the government from the excise tax on sofas? $
Consider public policy aimed at smoking.a. Studies indicate that the price elasticity of demandfor cigarettes is about 0.4. If a pack of cigarettescurrently costs $5 and the government wantsto reduce smoking by 20 percent, by how muchshould it increase the price?b. If the government permanently increases theprice of cigarettes, will the policy have a largereffect on smoking one year from now or five yearsfrom now?c. Studies also find that teenagers have a higherprice elasticity of demand than adults. Why mightthis be true?