Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 18, Problem 18.2.13PA
To determine
Changes in price and quantity of automobiles.
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The government wants to stop obesity in children, so they decide to tax soda producers for each unit of soda sold. If demand for soda is relatively elastic, and supply is relatively inelastic will suppliers or consumers pay a larger share of the tax? Briefly explain why.
Suppose the Canadian government has decided to place an
excise tax of $20 per tire on producers of automobile tires.
Excise taxes are also called sales or commodity taxes.
Previously, there was no excise tax on automobile tires. As a
result of the excise tax, producers of tires, such as
Bridgestone and Michelin, are going to alter their tire prices.
The graph illustrates the demand and supply curves for
automobile tires before the excise tax.
Please shift the appropriate curve or curves on the graph to
demonstrate the new equilibrium.
What is the price consumers pay for a tire post tax? Round to
the nearest 10.
price paid by consumers:
What is the price producers receive for a tire net of taxes?
Round to the nearest 10.
$
150
140
130
120
110
Price per tire
8
100
80
70
60
50
0
1
2
3
Supply
Demand
4
5
Quantity of tires
6
7
8
9 10
Suppose the Canadian government has decided to place an
excise tax of $20 per tire on producers of automobile tires.
Excise taxes are also called sales or commodity taxes.
Previously, there was no excise tax on automobile tires. As a
result of the excise tax, producers of tires, such as
Bridgestone and Michelin, are going to alter their tire prices.
The graph illustrates the demand and supply curves for
automobile tires before the excise tax.
Please shift the appropriate curve or curves on the graph to
demonstrate the impact of the new tax.
150
140
130
120
Price
888
110
100
90
Supply
80
00
60
50
°
1
2
3
4
5
Quantity
What is the price consumers pay for a tire post tax? Round to
the nearest 10.
70
288
price paid by consumers: $ 100
Demad
10
6
7
8
9
10
Chapter 18 Solutions
Microeconomics (7th Edition)
Ch. 18 - Prob. 18.1.1RQCh. 18 - Prob. 18.1.2RQCh. 18 - Prob. 18.1.3RQCh. 18 - Prob. 18.1.4RQCh. 18 - Prob. 18.1.5PACh. 18 - Prob. 18.1.6PACh. 18 - Prob. 18.1.7PACh. 18 - Prob. 18.1.8PACh. 18 - Prob. 18.1.9PACh. 18 - Prob. 18.1.10PA
Ch. 18 - Prob. 18.1.11PACh. 18 - Prob. 18.2.1RQCh. 18 - Prob. 18.2.2RQCh. 18 - Prob. 18.2.3RQCh. 18 - Prob. 18.2.4RQCh. 18 - Prob. 18.2.5PACh. 18 - Prob. 18.2.6PACh. 18 - Prob. 18.2.7PACh. 18 - Prob. 18.2.8PACh. 18 - Prob. 18.2.9PACh. 18 - Prob. 18.2.10PACh. 18 - Prob. 18.2.11PACh. 18 - Prob. 18.2.12PACh. 18 - Prob. 18.2.13PACh. 18 - Prob. 18.3.1RQCh. 18 - Prob. 18.3.2RQCh. 18 - Prob. 18.3.3PACh. 18 - Prob. 18.3.4PACh. 18 - Prob. 18.3.5PACh. 18 - Prob. 18.3.6PACh. 18 - Prob. 18.3.7PACh. 18 - Prob. 18.3.8PACh. 18 - Prob. 18.3.9PACh. 18 - Prob. 18.3.10PACh. 18 - Prob. 18.3.11PACh. 18 - Prob. 18.4.1RQCh. 18 - Prob. 18.4.2RQCh. 18 - Prob. 18.4.3RQCh. 18 - Prob. 18.4.4RQCh. 18 - Prob. 18.4.5RQCh. 18 - Prob. 18.4.6PACh. 18 - Prob. 18.4.7PACh. 18 - Prob. 18.4.8PACh. 18 - Prob. 18.4.9PACh. 18 - Prob. 18.4.10PACh. 18 - Prob. 18.4.11PACh. 18 - Prob. 18.4.12PACh. 18 - Prob. 18.4.13PACh. 18 - Prob. 18.4.14PACh. 18 - Prob. 18.4.15PACh. 18 - Prob. 18.1CTE
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- Suppose the Canadian government has decided to place an excise tax of $20 per tire on producers of automobile tires. Excise taxes are also called sales or commodity taxes. Previously, there was no excise tax on automobile tires. As a result of the excise tax, producers of tires, such as Bridgestone and Michelin, are going to alter their tire prices. The graph illustrates the demand and supply curves for automobile tires before the excise tax. Please shift the appropriate curve or curves on the graph to demonstrate the new equilibrium. What is the price consumers pay for a tire post tax? Round to the nearest 10. price paid by consumers: $ What is the price producers receive for a tire net of taxes? Round to the nearest 10. price received by producers: $ Price per tire 150 140 130 120 110 100 90 80 70 60 50 0 1 2 3 Supply Demand 4 5 Quantity of tires 6 7 8 9 10arrow_forwardA political candidate is proposing a large increase in the tax on cigarettes and alcohol. he says I'm not proposing these taxes to raise revenue, but to discourage these obnoxious behaviors. if the prices of cigarettes and alcohol go up most people will quit using them entirely. after all, no one needs to drink or smoke. do you agree or disagree? why? use a graph to help illustrate.arrow_forwardPhiladelphia and several other cities have imposed an excise tax on sugary drinks (it’s aimed primarily at sodas such as Coca-Cola and Pepsi-Cola, but would apply to all drinks with high sugar content). Philadelphia’s tax significantly increases the price of sodas and other sugary beverages. While other cities have cited the health benefits of cutting back on sugar consumption as the reason for an excise tax on sugary drinks, Philadelphia’s mayor said that his city would impose the tax to raise revenue for the city government to pay for pre-kindergarten and other popular services. Which is an excise tax on sugary drinks more likely to accomplish: a large reduction in the consumption of sugary drinks, or a large boost in revenue for local government? Justify your answer, being sure to identify the concept that your justification rests on.arrow_forward
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