ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Suppose an economist estimates the price elasticity of demand for sugary drinks is -4.2, while its price elasticity of supply is 1.2. If the government decides to impose a per-unit tax of $9 per can of sugary drinks sold, how would the market price of sugary drinks be affected? Show your calculationarrow_forwardP $3.00 $2.66 $2.00 18. You are in the business of producing and selling hamburgers, French fries, pizza, and ice cream. The mayor of your city plans to impose a sales tax on one of these products. Based on the elasticities: j. k. Which of these goods would your customers least like to be taxed? Which of these goods would your customers prefer to be taxed? B S₁ So 130 150 bb bb Figure two: effect of excise tax on supply and demand QUESTION #19: a) TO OU a. b. C. b) a. b. C. Before the Tax: Price the Consumer Pays = Price the Producer Receives = Quantity = After the Tax, Price the Consumer Pays = Price the Producer Receives = Tax per unit = d. Quantity = e. Total Tax Revenue = f. Proportion of the Total Tax Consumers Pay = g. Proportion of the Total Tax Producers Pay = h. Who Pays the Burden of the Tax = i. DWL = ?arrow_forwardDoyle and Samphantharak (2008) find that when a 5% gas tax is implemented, prices consumers pay for gas increase by about 4%. What role does demand elasticity play in determining the size of this price change? That is, under what demand elasticity cases would the price change be closer to 5%, or closer to 0%? Illustrate and explain using supply-and-demand graph(s)..arrow_forward
- 2. The elasticity of demand for guitars is -2.0, and the elasticity of supply is 3.0. How much will the price of guitars change with a per-unit tax of $2?arrow_forwardWhy must local governments pay attention to the types of products they tax. Describe in detail how the elasticity of these products impacts the expected revenue to be generated by these local Governmentsarrow_forwardCan you explain with graphs as well pleasearrow_forward
- Suppose the government applies a specific tax to a good where the demand elasticity, E, is -1.4, and the supply elasticity, n, is 1.2. This good would not be an ideal good for the government to tax since demand is: A. inelastic and would raise much revenue B. elastic and would raise much revenue C. inelastic and would not raise much revenue D. elastic and would not raise much revenue what is the tax incidence on consumers? $?arrow_forwardSuppose in the market for cigarettes, the price elasticity of supply is 2.4 and the price elasticity of demand is −0.8. If an excise tax is imposed on sellers of cigarettes, then _____. a buyers and sellers will pay equal shares of the tax b buyers will pay a greater share of the tax than sellers will c buyers will pay the whole tax d sellers will pay a greater share of the tax than buyers will e sellers will pay the whole taxarrow_forwardWhat is the price elasticity of demand(Using the Midpoint method) when the price changes from $10 to $13? If the Government imposes a tax of $6 per burrito, how many burritos will be sold in the market?arrow_forward
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