Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 8, Problem 3QR
To determine
The taxes and the
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What is the tax incidence of an excise tax when demand is highly inelastic and highly elastic?
How do the relative elasticities of supply and demand determine tax or subsidy incidence?
Would consumer or producer carry the burden of tax if good is elastic? Show on a graph
Chapter 8 Solutions
Essentials of Economics (MindTap Course List)
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- What is the nature of the deadweight loss accompanying taxes? Why is it often referred to as an excess burden?arrow_forwardUsing a graph, discuss how the elasticity of demand influences the incidence of a taxarrow_forwardWhat is the tax incidence of an excise tax when demand is highly inelastic? Highly elastic? What effect does the elasticity of supply have on the incidence of an excise tax? What is the efficiency loss of a tax, and how does it relate to elasticity of demand and supply?arrow_forward
- Can 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_forwardWhat happens to the deadweight loss and taxrevenue when a tax is increased?arrow_forwardWhat is the incidence of an excise tax when demand is highly inelastic? Highly elastic? What effect does the elasticity of supply have on the incidence of an excise tax? What is the effifi ciency loss of a tax, and how does it relate to elasticity of demand and supply?arrow_forward
- Assume that the elasticity of demand for fanta is -0.8 while the elasticity of supply is 0.4. What is the pass-through fraction of a tax on fanta to consumers?arrow_forwardWould consumer or producer carry the burden of tax if good is inelastic? Show on a grapharrow_forwardCan you explain How a tax shifts the demand curve and the supply curve? I don’t know what the correct answer to this isarrow_forward
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