Why 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 Governments
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- Why 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 Governments
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- Suppose 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 taxAssume that the elasticity of demand for fanta is -0.8 while the elasticity of supply is 0.4. What is the pass-through fraction of a tax on fanta to consumers?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 calculation
- The government imposes a per-unit tax of 4 sheqles on banana and demand for banana is elastic. Calculate the consumer and producer share of tax burden and explain it on the graph?Suppose the price elasticity of demand for luxury boats is zero. Explain, with the use of a diagram, what the effect of imposing an indirect tax would be on price, quantity sold, and tax revenue gained from the sale of luxury boats.Based on your knowledge of the price elasticity of demand, do you think the deadweight loss of a soda/junk-food tax would be relatively large or relatively small?
- Suppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.8 and 0.7 respectively. Suppose the government imposes a per-unit tax on the cigarette sellers. Who, buyers or sellers, would share a heavier tax burden? Explain your answers without calculation.Alcohol and tobacco are products that contribute the most to the feral government’s tax revenue. Use the concept of elasticity to explain why.Suppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.8 and 0.7 respectively. Suppose the government imposes a per-unit tax of $45 Some economists believe that a sales tax, in general, is undesirable. Explain. Despite this, why do most countries still impose a tax on cigarette? Explain plausible arguments.
- 6 of 11 Example 5. Maximizing Tax Revenue. Suppose the demand and supply functions for a product are p = 2800-8q-q/3 and p = 400+2q respectively, where p is in dollars and q is the number of units. Find the tax t that will maximize the tax revenue T, and find the maximum tax revenue.If the price elasticity of demand for decorative pillows is 2.5 and the price elasticity of supply is 0.8, the incidence of an excise tax placed on the sale of decorative pillows would be: more on consumers than on producers. more on producers than on consumers. entirely on consumers. entirely on producers.What is the tax incidence of an excise tax when demand is highly inelastic and highly elastic?