Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 4.4.9PA
To determine
The impact of the tax on liquor.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Briefly explain how subsidizing the purchase of good "X" could end raising the price of good "X"
Years ago, an apple producer argued that the United States should enact a tariff, or a tax, on imports of bananas. His reasoning was that “the enormous imports of cheap bananas into the United States tend to curtail the domes-tic consumption of fresh fruits produced in the United States.”.
Was the apple producer assuming that apples and bananas are substitutes or complements? Briefly explain.
If a tariff on bananas acts as an increase in the cost of supplying bananas in the United States, use two demand and supply graphs to show the effects of the apple producer’s proposal. One graph should show the effect on the banana market in the United States, and the other graph should show the effect on the apple market in the United States. Be sure to label the change in equilibrium price and quantity in each market and any shifts in the demand and supply curves.
3)Brandon and his family often rent movies from the new internet movie streaming service, Xanadu. The table below shows Brandon’s demand schedule for eight movie rentals that Brandon’s family is interested in watching.
Number of Internet movie rentals
Willingness to pay each rental
1st
$7
2nd
$6
3rd
$5
4th
$4
5th
$3
6th
$2
7th
$1
8th
$0
a) If the price of each movie rental from Xanadu is $3, how many movie rentals will Brandon buy, and how much consumer surplus does Brandon receive? Explain your answer, and show your work.
(Enter your response here.)
b) If the price of each movie rental from Xanadu is $5, how many movie rentals will Brandon buy, and how much consumer surplus does Brandon receive? Explain your answer, and show your work.
(Enter your response here.)
c) If the Xanadu online service offers as many movie rentals as the customer wants to download, all for a one-time fee of $25.00, how many movie rentals…
Chapter 4 Solutions
Economics (7th Edition) (What's New in Economics)
Ch. 4.A - Prob. 1RQCh. 4.A - Prob. 2RQCh. 4.A - Prob. 3RQCh. 4.A - Prob. 4RQCh. 4.A - Prob. 5PACh. 4.A - Prob. 6PACh. 4.A - Prob. 7PACh. 4.A - Prob. 8PACh. 4.A - Prob. 9PACh. 4 - Prob. 1TC
Ch. 4 - Prob. 2TCCh. 4 - Prob. 4.1.1RQCh. 4 - Prob. 4.1.2RQCh. 4 - Prob. 4.1.3RQCh. 4 - Prob. 4.1.4RQCh. 4 - Prob. 4.1.5PACh. 4 - Prob. 4.1.6PACh. 4 - Prob. 4.1.7PACh. 4 - Prob. 4.1.8PACh. 4 - Prob. 4.1.9PACh. 4 - Prob. 4.1.10PACh. 4 - Prob. 4.1.11PACh. 4 - Prob. 4.1.12PACh. 4 - Prob. 4.1.13PACh. 4 - Prob. 4.1.14PACh. 4 - Prob. 4.2.1RQCh. 4 - What is economic efficiency? Why do economists...Ch. 4 - Prob. 4.2.3PACh. 4 - Prob. 4.2.4PACh. 4 - Prob. 4.2.5PACh. 4 - Prob. 4.2.6PACh. 4 - Prob. 4.2.7PACh. 4 - Prob. 4.2.8PACh. 4 - Prob. 4.2.9PACh. 4 - Prob. 4.2.10PACh. 4 - Prob. 4.3.1RQCh. 4 - Prob. 4.3.2RQCh. 4 - Prob. 4.3.3RQCh. 4 - Prob. 4.3.4RQCh. 4 - Prob. 4.3.5PACh. 4 - Prob. 4.3.6PACh. 4 - Prob. 4.3.7PACh. 4 - Prob. 4.3.8PACh. 4 - Prob. 4.3.9PACh. 4 - Prob. 4.3.10PACh. 4 - Prob. 4.3.11PACh. 4 - Prob. 4.3.12PACh. 4 - Prob. 4.3.13PACh. 4 - Prob. 4.3.14PACh. 4 - Prob. 4.3.15PACh. 4 - Prob. 4.3.16PACh. 4 - Prob. 4.3.17PACh. 4 - Prob. 4.3.18PACh. 4 - Prob. 4.3.19PACh. 4 - Prob. 4.4.1RQCh. 4 - Prob. 4.4.2RQCh. 4 - Prob. 4.4.3RQCh. 4 - Prob. 4.4.4RQCh. 4 - Prob. 4.4.5PACh. 4 - Prob. 4.4.6PACh. 4 - Prob. 4.4.7PACh. 4 - Prob. 4.4.8PACh. 4 - Prob. 4.4.9PACh. 4 - Prob. 4.4.10PACh. 4 - Prob. 4.2CTE
Knowledge Booster
Similar questions
- Suppose a local supermarket runs a discount campaign on the sales of shampoos using discount coupons – any customer who shows a discount coupon will be offered an X% discount on the original retail price on Black Friday. Briefly explain the economics behind this discount campaign.arrow_forwardppart D E 3)Brandon and his family often rent movies from the new internet movie streaming service, Xanadu. The table below shows Brandon’s demand schedule for eight movie rentals that Brandon’s family is interested in watching. Number of Internet movie rentals Willingness to pay each rental 1st $7 2nd $6 3rd $5 4th $4 5th $3 6th $2 7th $1 8th $0 a) If the price of each movie rental from Xanadu is $3, how many movie rentals will Brandon buy, and how much consumer surplus does Brandon receive? Explain your answer, and show your work. (Enter your response here.) b) If the price of each movie rental from Xanadu is $5, how many movie rentals will Brandon buy, and how much consumer surplus does Brandon receive? Explain your answer, and show your work. (Enter your response here.) c) If the Xanadu online service offers as many movie rentals as the customer wants to download, all for a one-time fee of $25.00, how many…arrow_forwardSuppose the government imposes a $3 excise tax on the sale of sweaters in Alaska by charging suppliers $3 for each sweater sold. Using economic analysis, we would predict that: the price of sweaters will increase but by less than $3 consumers of sweaters will bear the entire amount of the tax the price of sweaters will decrease by $3 the price of sweaters will increase by $3 From the lecture video on elasticity, suppose a surfboard producer was considering lowering the price of surfboards in order to increase total revenues. Under what conditions would this idea work?) Always, because when producers lower price, consumption increases. This is the Law of Demand. When the elasticity of demand is inelastic. When the elasticity of demand is elastic. When the elasticity of demand is -0.58.arrow_forward
- Suppose the market price of sunflower changed to 5 (P = 5) from the market equilibrium (Question 10). 12. Use the percentage change in quantity and price to calculate the price elasticity of demand from this change 13. What is new consumer surplus and producer surplus? Who gets benefit from this price change? Briefly explain.arrow_forwardAccording to a news story about the bus system in the Lehigh Valley in Pennsylvania, "Ridership fell 14 percent in 2012 after a 33 percent increase" in bus fares. Source: Dan Hartzell, "Rebounding from a 2012 Rate Hike, LANTA'S Ridership Was up Last Year," (Allentown, PA) Morning Call, March 13, 2014 Given this information, the demand for bus trips is The best explanation for this result is that A. over time people can find alternate forms of transportation. B. these trips are a small portion of someone's budget. C. bus trips only appeal to a certain market. D. bus trips are a necessity for those without cars.arrow_forwardIn the graph below, click on the dashed line that indicates the quantity consumed after a tax is imposed on coffee sales. price, P B D S coffee, Qarrow_forward
- 1. Years ago, an apple producer argued that the United States should enact a tariff, or a tax, on imports of bananas. His reasoning was that “the enormous imports of cheap bananas into the United States tend to curtail the domes-tic consumption of fresh fruits produced in the United States.”. a. Was the apple producer assuming that apples and bananas are substitutes or complements? Briefly explain. b. If a tariff on bananas acts as an increase in the cost of supplying bananas in the United States, use two demand and supply graphs to show the effects of the apple producer’s proposal. One graph should show the effect on the banana market in the United States, and the other graph should show the effect on the apple market in the United States. Be sure to label the change in equilibrium price and quantity in each market and any shifts in the demand and supply curves.arrow_forwardMacmillan Learning John and Michael are the only consumers in a town that is planning on putting on a fireworks display. The graph illustrates John's and Michael's demand curves for a fireworks display. Based on the information given in the graph, manipulate the movable demand curve to reflect the overall demand for the fireworks display. Cost ($) 4 3 2 5 12 11 10 9 287 John's demand 6 Michael's demand 1 0 0.0 1.0 2.0 Quantity Demand 3.0 What kind of good is a fireworks display? O quasi-public good public good private good common resourcearrow_forwardThe following graph represents supply and demand in the market for tanning sessions. Suppose that the government imposes a $15 excise tax on providers of tanning sessions. a. Using the graph below, demonstrate the effect of this tax on the market for tanning sessions. Instructions: Use the tool provided, 'New line,' to draw; either a new supply or demand curve that reflects the impact of this tax. Plot only the endpoints of the line. Then use the tool provided, 'New EQ,' to indicate the new equilibrium point. $50 Tools $45 $40 Supply, New EQ New line $35 $30 $25 $20 $15 $10 $5 Demand, 10 20 30 40 50 60 70 80 90 100 Quantity (number of tanning sessions) b. Who pays more of the tax incidence? O Consumers and producers split the tax. O Producers, because the price elasticity of supply exceeds the price elasticity of demand. O Consumers, because the price elasticity of supply exceeds the price elasticity of demand. O Consumers, because the price elasticity of supply is less than the price…arrow_forward
- a. The recent statement given in October 2020 by French President undermined the sentiments of the Muslims all around the world. The Muslims of Pakistan decided to record their protest by boycotting French products. A recent survey shows that the shunning of French products has bought about 35 percent decrease in the sales within a month. Suppose, in September 2020, the market for Garnier hair color a French product was at equilibrium with an equilibrium price 1050 and equilibrium quantity of 12,000 in Pakistan. Analyze the impact of a boycott on the demand of Garnier hair color for the month of October 2020 in Pakistan and illustrate it graphically. Also, explain why or why not the demand has changed? b. Consider a market for Tea a normal good in Karachi. You are supposed to analyze and discuss the effect on the equilibrium output and the price in the Tea market in Karachi for the October, 2020 after the following changes (Other things held constant). In each case, explain your answer…arrow_forwardSuppose that the government imposes a per-unit tax on cell phones. The tax is imposed on producers of cell phones and the amount of the tax is $50 per cell phone. The following graph shows the effect of the tax. Use the graph to answer the following questions. a) How much of the tax per cell phone is paid by producers? How much of the tax per cell phone is paid by consumers? b) How much tax revenue (in total) does the government collect from the tax imposed on cell phones? c) What is the amount of the deadweight loss due to the presence of the tax on cell phones?arrow_forwardThe following graph represents supply and demand in the market for tanning sessions. Suppose that the government imposes a $15 excise tax on providers of tanning sessions. a. Using the graph below, demonstrate the effect of this tax on the market for tanning sessions. Instructions: Use the tool provided, 'New line,' to draw; either a new supply or demand curve that reflects the impact of this tax. Plot only the endpoints of the line. Then use the tool provided, 'New EQ,' to indicate the new equilibrium point. $50 Tools $45 $40 Supplyo New EQ New line $35 $30 $25 $20 $15 $10 $5 Demand, 10 20 30 40 50 60 70 80 90 100 Quantity (number of tanning sessions) b. Who pays more of the tax incidence? O Consumers, because the price elasticity of supply exceeds the price elasticity of demand. O Consumers and producers split the tax. O Consumers, because the price elasticity of supply is less than the price elasticity of demand. O Producers, because the price elasticity of supply exceeds the price…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning