Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 5, Problem 25SQ
To determine
The implication of the more elastic
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Which of the following statements about the relationship between elasticity and tax incidence are true ?
Choose one or more:
A.The incidence of a tax depends on who the tax is placed on.
B.When demand is more inelastic than supply, consumers bear more of the incidence of a tax.
C.A tax on a good for which both demand and supply are relatively inelastic will cause a relatively large transfer of welfare from consumers and producers to the government.
D.When demand is more inelastic than supply, producers bear more of the incidence of a tax.
E.If a tax is imposed on a good with a perfectly inelastic demand, then consumers bear the full incidence of the tax.
Which of the following statements about the relationship between elasticity and tax incidence are true ?Choose one or more:
A.The incidence of a tax depends on who the tax is placed on.
B.When demand is more inelastic than supply, consumers bear more of the incidence of a tax.
C.A tax on a good for which both demand and supply are relatively inelastic will cause a relatively large transfer of welfare from consumers and producers to the government.
D.When demand is more inelastic than supply, producers bear more of the incidence of a tax.
E.If a tax is imposed on a good with a perfectly inelastic demand, then consumers bear the full incidence of the tax.
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Identify whether the statements about the economics of taxes are true or false.
a. An excise tax can distort incentives and create missed opportunities for mutually beneficial transactions.
b. When demand is elastic and supply is inelastic, the burden of a tax falls mainly on consumers.
c. When demand is inelastic and supply is elastic, the burden of a tax falls mainly on producers.
d. The incidence of a tax is determined by which group – buyers or sellers – must actually pay the gov
Chapter 5 Solutions
Micro Economics For Today
Ch. 5.3 - According to the previous discussion, what factors...Ch. 5 - If the price of a good or service increases and...Ch. 5 - Prob. 2SQPCh. 5 - Prob. 3SQPCh. 5 - Prob. 4SQPCh. 5 - Suppose a university raises its tuition from 3,000...Ch. 5 - Prob. 6SQPCh. 5 - Suppose a movie theater raises the price of...Ch. 5 - Charles loves Mello Yello and will spend 10 per...Ch. 5 - Prob. 9SQP
Ch. 5 - Prob. 10SQPCh. 5 - Prob. 11SQPCh. 5 - Prob. 12SQPCh. 5 - Prob. 13SQPCh. 5 - Consider the following supply schedule: What is...Ch. 5 - Prob. 15SQPCh. 5 - Prob. 16SQPCh. 5 - A perfectly elastic demand curve has an elasticity...Ch. 5 - Prob. 2SQCh. 5 - Prob. 3SQCh. 5 - Prob. 4SQCh. 5 - Price elasticity of demand tends to be larger in...Ch. 5 - If a decrease in the price of movie tickets...Ch. 5 - Prob. 7SQCh. 5 - The president of Tucker Motors says, Lowering the...Ch. 5 - Prob. 9SQCh. 5 - Along a segment of the demand curve where the...Ch. 5 - Prob. 11SQCh. 5 - Prob. 12SQCh. 5 - Prob. 13SQCh. 5 - Prob. 14SQCh. 5 - Prob. 15SQCh. 5 - Prob. 16SQCh. 5 - Suppose Sally buys exactly five bars of English...Ch. 5 - Prob. 18SQCh. 5 - Prob. 19SQCh. 5 - Prob. 20SQCh. 5 - If bus travel is an inferior good, its income...Ch. 5 - Prob. 22SQCh. 5 - If automobiles and gasoline are complements, then...Ch. 5 - Suppose that when price is 10, quantity supplied...Ch. 5 - Prob. 25SQ
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Similar questions
- Suppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.6 and 0.8 respectively. a. 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. b. Suppose the government imposes a per-unit tax of $40 on the cigarette sellers. By how much would buyers and sellers of cigarettes share the tax burden respectively? Show your calculation. c. Suppose many small sellers, such as newsstands, complain the heavy tax burden borne by them. Would it be better to these small sellers if the government decides to impose a $20 per-unit tax on both the buyers and the sellers of cigarette? Explain.arrow_forward1. What is the price to be paid by the buyers after the tax is imposed? How much is the rise in the price paid by consumers? 2. What is the net price received by the sellers after the tax is imposed? How much is the fall in the price received by the producers? 3. Prove that the increase (or change) in the price is dependent on the elasticity of demand and supply. 4. Determine burden of the tax (or the incidence of the tax that falls on consumers and producer). Who gets most of the burden of the tax. Answer on the basis of elasticity. 5. How much tax revenue is expected by the government to be raised for this good per year?arrow_forwardIf the government wants to raise tax revenue, which of the following items are good candidates for an excise tax? Choose one or more: A. toilet paper B. automobile tires C. cigarettes D. sweet potatoesarrow_forward
- Based on the diagram, what is the consumer's burden of the tax? $ Price 200- What is the producer's burden of the tax? $ 180- S' What is the amount of the tax? $ 160- IS 140- .... . The burden of the tax is producers because the elasticity of demand the 120- elasticity of supply. 100- 80- is less than 60- exceeds 40- 20- 0- 20 40 60 80 100 120 140 160 180 D.arrow_forward6. Governor Gavin Newsom wants to raise money. He has a choice of imposing an excise tax of the same amount on one of two previously untaxed goods: restaurant meals or sales of gasoline. Both the demand and the supply of restaurant meds are more elastic than the demand for and the supply of gasoline. Do the following: a. Draw a diagram that illustrates the tax revenue and deadweight loss from taxation of restaurant meals b. Draw a diagram that illustrates the tax revenue and deadweight loss from taxation of [gasoline. If the goal was to maximize government tax revenue, which item should be taxed? |Why? c.arrow_forward
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