Principles of Economics (Second Edition)
2nd Edition
ISBN: 9780393614077
Author: coppock, Lee; Mateer, Dirk
Publisher: W. W. Norton & Company
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Chapter 5, Problem 5QFR
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With the help of appropriate diagrams, explain how a tax can be used to reduce the consumption of a harmful product such as cigarettes.
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- How does a tax on a good affect the price paid by buyers, price receive by sellers, and the quantity sold?arrow_forwardIf a tax of 75¢ a cup is introduced, what is the price of a cup of coffee and how much coffee is bought? Who pays the tax?arrow_forwardConsider the market below where the government has imposed a $12 excise tax on this product. P $33 $24 $18 $15 $12 $3 A B D F QE₁ 18 с E Siafter tax So before tax < Q QE₂ QE。 30 42 What area on the graph represents the total amount of DEADWEIGHT LOSS that results from the imposition of the tax?arrow_forward
- The government taxes both clothing and tobacco. For a similarly sized tax, would you expect the quantity demanded of clothing or tobacco to be more affected?arrow_forwardCan you explain what happens when a tax is imposed on the buyer of a product and also what would happen if a tax is imposed on the seller? arrow_forwardGovernments impose excise taxes on goods that have inelastic demand, such as cigarettes, more often than in other cases. Why?arrow_forward
- Does a tax on buyers affect the demand curve?arrow_forwardHow does the size of deadweight loss (DWL) depend on the price elasticities?arrow_forwardIn a country the Government determines to increase the tax on gasoline by $0.20 per gallon. The price of gasoline after taxes though only goes up by $0.15. Does this mean the gas station is not collecting the correct amount of taxes?arrow_forward
- The current market price of bananas is $1 per pound. Use a graph and words to show the effect of a ten cent tax on each pound of bananas. Insert your own numbers into your graph. Be sure to indicate the new price paid by consumers, the new price received by sellers, and the new quantity sold.arrow_forwardWhat are pros and cons to increasing the gasoline tax?arrow_forwardMany cities have experienced a substantial decrease in the amount of garbage being collected after they changed from levying a flat tax on each household to a system where the homeowner is charged a fee for each bag or can picked up. Would this have been the result of a change in demand or a change in the quantity demanded? Would you recommend the flat fee or the fee per bag? Why?arrow_forward
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