7. Problems and Applications Q7Congress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $0.50 tax on eachgallon of gasoline sold.Suppose they decided to impose the tax on producers.In the following graph, shows the effect of a $0.50 tax on each gallon of gasoline sold imposed on producers by shifting the demand or supply curve.Price of Gasoline (Dollars per gallon)302.520SupplyDemandQuantity of Gasoline (Thousands of guilons)-O-Demand18Supply True or False: The price consumers pay will be lower if the tax were imposed on producers.O TrueO FalseIf the demand for gasoline were less elastic, this tax would beTrue or False: Consumers of gasoline are helped by this tax.O TrueO FalseWorkers in the oil industry areby this tax.effective in reducing the quantity of gasoline consumed.

Every commodity's price elasticity of demand will be elastic if there are several substitute…

Congress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $0.50 tax on each gallon of gasoline sold. Suppose they decided to impose the tax on producers. In the following graph, shows the effect of a $0.50 tax on each gallon of gasoline sold imposed on producers by shifting the demand or supply curve. Price of Gasoine (Dollars per gallon) 30 2.5 20 Supply Demand O- Demand 161 Supply

Congress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $0.50 tax on each gallon of gasoline sold. Suppose they decided to impose the tax on producers. In the following graph, shows the effect of a $0.50 tax on each gallon of gasoline sold imposed on producers by shifting the demand or supply curve. Price of Gasoine (Dollars per gallon) 30 2.5 20 Supply Demand O- Demand 161 Supply

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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