Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 20, Problem 10DQ
To determine
An excise tax on cigarettes in terms of the efficiency loss and tax incidence.
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Students have asked these similar questions
Imagine that the demand curve for beer is given by P=9-Q and supply for beer is given by P=1+Q. What is the deadweight loss associated with a
tax of $3 per unit?
12
O 2.25
O None of the above.
O 6.25
Your state legislature is considering increasing the sales tax on two different commodities:
prescription drugs and restaurant meals. You estimate owm-price elasticity of demand for
prescription drugs Lo be -0.08 and uwn-price elasticity of dermard for reslaurant meals lo be -0.95. If
the legislaturc's primary gnal in incrcasing taxcs is to raiscmoncy most efficiontly (i.c., minimizing the
resulting deadweight loss), it should tax
bullıdrugs and restaurant meals equally.
drugs bccausc domand is morc pricc inclastic.
reslaurant meals Lecause lhey are nol a rnecessily.
only thosc prescription drugs that arc not lifc saving.
restaurant meals because demand is more price elastic.
Suppose the demand for a product is given by P = 30-3Q. Also, the supply is given by P = 10 + Q.
If a $4 per-unit excise tax is levied on the buyers of a good, the deadweight loss created by this tax
will be
$4
$16
None of these
$24
O $8
Question 5
Suppose the demand for a product is given by P = 30 - 2Q. Also, the supply is given by P = 5 + 3Q.
If a $5 per-unit excise tax is levied on the buyers of a good, after the tax, consumer surplus is equal
to
O None of these
$16
$25
$24
1 pts
$2.50
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