Instructions: Type in the amount of a tax, and click Supply or Demand to choose whether the tax is imposed on sellers or on buyers. Then move the Demand or Supply sliders to change the elasticities of supply and demand. Set the tool to illustrate an $8 tax imposed on the buyers. Adjust the elasticity of demand so that the vertical intercept is $80. Adjust the supply elasticity so that the vertical intercept of the supply curve is $40. Answer the following questions: a. What is the price paid with this $8 tax? $[ (answer to two decimal places) b. How does the new price change as you move the supply slider towards "less elastic?" the "after" price falls c. What changes if you impose the tax on sellers instead of on buyers? supply shifts instead of demand

Instructions: Type in the amount of a tax, and click Supply or Demand to choose whether the tax is imposed on sellers or on buyers. Then move the Demand or Supply sliders to change the elasticities of supply and demand. Set the tool to illustrate an $8 tax imposed on the buyers. Adjust the elasticity of demand so that the vertical intercept is $80. Adjust the supply elasticity so that the vertical intercept of the supply curve is $40. Answer the following questions: a. What is the price paid with this $8 tax? $[ (answer to two decimal places) b. How does the new price change as you move the supply slider towards "less elastic?" the "after" price falls c. What changes if you impose the tax on sellers instead of on buyers? supply shifts instead of demand

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 25CTQ: Transatlantic air travel in business class has an estimated elasticity of demand of 0.62, while...

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