Macroeconomics
11th Edition
ISBN: 9781260506891
Author: Colander
Publisher: MCG
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Question
Chapter 5.A, Problem 6QE
(a):
To determine
Effect of per gallon tax on the supply and
(b):
To determine
New
(c):
To determine
Price of producers and consumers.
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Students have asked these similar questions
The federal government recently decided to raise the excise tax on hard liquor. Assuming the market of hard liquor is competitive, please answer the following questions:
a. Graphically illustrate the effects of this tax on the market for hard liquor. (Hint: How does the equilibrium quantity change? How does the price change?)
b. Would a $1 increase in the excise tax on liquor increase the equilibrium price of liquor by $1? Explain.
c. How would the excise tax on hard liquor affect a beer distributor?
Answer all four:Use the data below to answer the following questions:
Price
Quantity Supplied
$4
4
$7
13
Calculate the price elasticity of supply when the price rises from $4 to $7. Round your answer to the nearest hundredth.
Is the price elasticity of supply elastic or inelastic?
The government wants to increase production of this good. Would it make more sense to offer a subsidy or a tax?
Based on your previous answers, would the government plan to increase production be likely to be effective or ineffective? Explain your answer.
a) What is the Equilibrium Price and Equilibrium Quantity
b) If the government imposes a $15 per unit tax on sellers on this good what is the new quantity sold in units, how much will the buyers pay, how much will sellers receive?, and how much will the government receive in tax revenue?
c) What is the price elasticity of demand and over this price change? What about the supply?
d) Based on the elasticities calculated above, who will bear a greater burden from the tax? Why?
Chapter 5 Solutions
Macroeconomics
Ch. 5.1 - Prob. 1QCh. 5.1 - Prob. 2QCh. 5.1 - Prob. 3QCh. 5.1 - Prob. 4QCh. 5.1 - Prob. 5QCh. 5.1 - Prob. 6QCh. 5.1 - Prob. 7QCh. 5.1 - Prob. 8QCh. 5.1 - Prob. 9QCh. 5.1 - Prob. 10Q
Ch. 5.A - Prob. 1QECh. 5.A - Prob. 2QECh. 5.A - Prob. 3QECh. 5.A - Prob. 4QECh. 5.A - Prob. 5QECh. 5.A - Prob. 6QECh. 5.A - Prob. 7QECh. 5.A - Prob. 8QECh. 5.A - Prob. 9QECh. 5 - Prob. 1QECh. 5 - Prob. 2QECh. 5 - Prob. 3QECh. 5 - Prob. 4QECh. 5 - Prob. 5QECh. 5 - Prob. 6QECh. 5 - Prob. 7QECh. 5 - Prob. 8QECh. 5 - Prob. 9QECh. 5 - Prob. 10QECh. 5 - Prob. 11QECh. 5 - Prob. 12QECh. 5 - Prob. 13QECh. 5 - Prob. 14QECh. 5 - Prob. 15QECh. 5 - Prob. 16QECh. 5 - Prob. 17QECh. 5 - Prob. 1QAPCh. 5 - Prob. 2QAPCh. 5 - Prob. 3QAPCh. 5 - Prob. 4QAPCh. 5 - Prob. 5QAPCh. 5 - Prob. 1IPCh. 5 - Prob. 2IPCh. 5 - Prob. 3IPCh. 5 - Prob. 4IPCh. 5 - Prob. 5IPCh. 5 - Prob. 6IPCh. 5 - Prob. 7IPCh. 5 - Prob. 8IPCh. 5 - Prob. 9IPCh. 5 - Prob. 10IPCh. 5 - Prob. 11IPCh. 5 - Prob. 12IPCh. 5 - Prob. 13IPCh. 5 - Prob. 14IP
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