The following graph shows the daily market for wine. Suppose the government institutes a tax of $40.60 per bottle. This places a wedge between the price buyers pay and the price sellers receive. 200 180 160 Demand Supply 140 120 100 Tax Wedge 80 60 40 20 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bottles of wine) PRICE (Dollars per bottle)

In 2020 the UK government introduced a sales tax on all products bought online from overseas. Please note this is not a tariff – it is a tax. The tax will be 2% of the value of the products sold in the UK. This tax is collected from online sellers such as Amazon or ebay. Source: BBC (2019). See link: https://www.bbc.com/news/business-50656106   Consider the market for online products. The initial market equilibrium is at 10 million products sold per year at an average price of $500 each. Then, the UK government imposes a tax on the market, collected from sellers (for example Amazon and ebay). The tax is 2% per item (each item has an average price of $500).   Show the effect of this on the market for online products. Show the effect on consumers of online products, on the online sellers and on the government. Does the UK economy gain or lose as a result of the tax? Explain why. Use a diagram to support your answer.

Price (dollars per gallon of ice cream) 20 18 16 14 12 10 50 100 150 200 250 300 350 Quantity (thousands of gallons of ice cream) The above figure shows the market for gourmet ice cream. In effort to reduce obesity, government places a $2 tax per gallon on suppliers in this market, shifting the supply curve from So to S1. The quantity of ice cream consumed before the tax is gallons and the quantity consumed after the tax is . gallons. A) 200,000; 250,000 B) 200,000; 300,000 C) 250,000; 200,000

The figure below represents the market for Gasoline, where initially the equilibrium price was $5.60. The picture shows the effect of a $1.50 tax on gasoline. Using the information from the figure, what is the price elasticity of supply(Using the Midpoint method) when moving from equilibrium to the new supply after the tax?(round your answer to 2 decimal places)

Scenario: The government requires consumers to pay a $34 tax on each unit of french fries that they buy. Show the most likely effect of this on the Demand curve for french fries. Price Demand for french fries Quantity