Imagine there is a tax on cigarettes and that consumers and producers each bear some portion of the tax. Assume that when vape pens were introduced, they were not taxed. How would you expect that introduction of vape pens to affect the distribution of the tax burden associated with the cigarette tax? O It will decrease the consumer tax burden because demand for cigarettes will become more elastic. O It will increase the consumer tax burden because demand for cigarettes will become more elastic. O It will decrease the consumer tax burden because demand for cigarettes will become more inelastic. O It will increase the consumer tax burden because demand for cigarettes will become more inelastic.

Imagine there is a tax on cigarettes and that consumers and producers each bear some portion of the tax. Assume that when vape pens were introduced, they were not taxed. How would you expect that introduction of vape pens to affect the distribution of the tax burden associated with the cigarette tax? O It will decrease the consumer tax burden because demand for cigarettes will become more elastic. O It will increase the consumer tax burden because demand for cigarettes will become more elastic. O It will decrease the consumer tax burden because demand for cigarettes will become more inelastic. O It will increase the consumer tax burden because demand for cigarettes will become more inelastic.

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Costs Of Taxation

Section: Chapter Questions

Problem 3CQQ

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Suppose the government removes a tax on buyers of a good and levies a tax ofthe same size on sellers of the good. How does this change in tax policy affectthe price that buyers pay sellers for this good, the amount buyers are out ofpocket including the tax, the amount sellers receive net of tax, and the quantityof the good sold?
1 t The data describes the market for luxury boats. Now the government puts 20 percent tax on luxury boats. With the tax imposed, the price of a luxury boat is OA. $330 million OB. $1.10 million OC. $0.20 million D. $1.20 million OE. $1 million a With the 20 percent tax on luxury boats, OA. the buyer pays all of the tax. OB. the buyer and the seller split the tax evenly. OC. the tax reduces the quantity of luxury boats sold to zero, so there is no tax. OD. it is impossible to say how the tax is split between the buyer and seller. OE. the seller pays all of the tax. 9 The government raises tax revenue of s Z 2 W S 3 e d millinn. AOC с C с $ 4 r f % 5 v t 6.0 Oll 6 3 b y h The supply of luxury boats is perfectly elastic, the demand for luxury boats is unit elastic, and with no tax on luxury boats the price is $1 million and 330 luxury boats a week are bought. & 7 u 1.60 1.40 1.20 1.00+ 0.80+ Q n 132 j Price (millions of dollars per boat) 198 264 330 Quantity (boats per week) sss Draw…
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