(a) Show in four diagrams the incidence of an indirect (specific) tax in the case of elastic and inelastic demand and elastic and inelastic supply. (b) Consider supply in the long run. Assume that a specific tax is imposed on a good that was previously untaxed. How will the incidence of this tax change as time passes?

A government is considering placing a tax on alcohol consumption (demand-side) with the goal of raising revenue in order to finance health care benefits such as Medicare. People who support the tax argue that the demand for alcohol is price inelastic in the short-run. Which of the following statements is true? a.This is a very good way to raise revenue both in the short term and in the long term because there are no substitutes for alcohol. b.No tax revenue can be raised in this way because alcohol sellers will just lower their price by the amount of the tax, and therefore the consumer price of alcohol will not change. c.This tax will not raise much revenue either in the short term or the long term because demand is price inelastic. d.The alcohol tax will raise a lot of revenue in the short-run, but it may not raise as much revenue in the long-run since people will substitute away from alcohol, making the long-run demand for alcohol more elastic.

If the inverse demand function for books is p=64-Q and the supply function is Q = P, what is the initial equilibrium? What is the welfare effect of a specific tax of t = $4? The initial equilibrium quantity is (round your answer to the nearest integer). The specific tax of t = $4 creates a deadweight loss of $ (round your answer to two decimal places).

In the free-market equilibrium of a perfectly competitive market, the price of the good is 90 dollars and the elasticity of demand and the elasticity of supply values are respectively Ed* = -6.6 and Es* = 4.1 Suppose the government imposes a per-unit tax equal to 10.4 payable by consumers. Calculate the estimate of the price firms charge consumers in the tax equilibrium using the elasticity values provided above. Then enter that price value below.