Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 8, Problem 8IAPA
To determine
To state:
The assumptions about the
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The following graph represents the demand and supply for blinkies (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario.
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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.
Do you think profit could be maintained if the tax burden were simply passed on to the consumers in the form of higher selling price? How will this affect sales? Explain.
Thoroughly analyze the impact of taxes on tobacco through the perspective of a smoker (a consumer in the tobacco market) worried about rising prices.
Focus on price elasticity in your answer.
Chapter 8 Solutions
Foundations of Economics (8th Edition)
Ch. 8 - Prob. 1SPPACh. 8 - Prob. 2SPPACh. 8 - Prob. 3SPPACh. 8 - Prob. 4SPPACh. 8 - Prob. 5SPPACh. 8 - Prob. 6SPPACh. 8 - Prob. 7SPPACh. 8 - Prob. 8SPPACh. 8 - Prob. 9SPPACh. 8 - Prob. 10SPPA
Ch. 8 - Prob. 1IAPACh. 8 - Prob. 2IAPACh. 8 - Prob. 3IAPACh. 8 - Prob. 4IAPACh. 8 - Prob. 5IAPACh. 8 - Prob. 6IAPACh. 8 - Prob. 7IAPACh. 8 - Prob. 8IAPACh. 8 - Prob. 9IAPACh. 8 - Prob. 10IAPACh. 8 - Prob. 1MCQCh. 8 - Prob. 2MCQCh. 8 - Prob. 3MCQCh. 8 - Prob. 4MCQCh. 8 - Prob. 5MCQCh. 8 - Prob. 6MCQCh. 8 - Prob. 7MCQCh. 8 - Prob. 8MCQ
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- give an explanation to the following statements: The higher the elasticity of supply in the labor market, the closer would budgetary expenditure be as a proxy for the social cost of a project.arrow_forwardWhy do labor experts disagree about whether labor taxes have small or large deadweight losses? Given your knowledge of economics and experience to date, what is your view on the issue? Explain your reasoning.arrow_forwardGovernment is known to utilize a product's elasticity measures to set taxes and subsidies. Use this information to set policy on one of the following products: tobacco products, petroleum products, agriculture products, or medical products according to your goal. Research the government's tax/subsidy policy in these areas and any objectives of the tax policy. State your goal, your prescribed action, and why you believe it will work using the information you found.arrow_forward
- Suppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.8 and 0.7 respectively. 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.arrow_forwardIf older workers have a tax elasticity of labor supply equal to 0.25, by how much will their work activity decline when they reach the Social Security earnings test limit? (Recall that the Social Security earnings test limit is 50 percent. Assume explicit taxes of 20 percent below that limit. Use the midpoint method.) Instructions: Enter your response as a positive percent rounded to one decimal place. Do not include a negative sign (-) with your answer.arrow_forwardIf supply is less elastic than demand when a market is in equilibrium, then taxing consumers for every unit of a good purchased will ultimately cause the tax burden to fall mostly onarrow_forward
- How does a Tax on Production affect a negatively sloped Demand curve or the Supply Curve? The supply curve shifts to the Left The supply curve shifts to the Right There is no shift, only movement along the Supply Curve The demand curve shifts to the leftarrow_forwardIf the demand for automobiles is price elastic and an excise tax is levied on sellers of automobiles that causes a 10% increase in the price of automobiles paid by buyers, then: The quantity demanded of automobiles will decrease by more than 10% and buyers will bear a proportionally larger share of the direct burden of the tax than sellers. The quantity demanded of automobiles will decrease by more than 10% and sellers will bear a proportionally larger share of the direct burden of the tax than buyers. The quantity demanded of automobiles will decrease by less than10% and total revenues from auto sales will increase. The quantity demanded of automobiles will decrease by less than 10% and total revenues from auto sales will decrease.arrow_forwardIf older workers have a tax elasticity of labor supply equal to 0.55, by how much will their work activity decline when they reach the Social Security earnings test limit (.e.. wage ceiling)? Recall that the Social Security earnings test limit says that Social Security benefits will be reduced by 50 cents for every additional $1 earned after the wage ceiling. Instructions: Enter your response as a positive percentage rounded to one decimal place. Do not include a negative sign with your answerarrow_forward
- Given the following information: QD = 240 – 5P QS = P Where QD is the quantity demanded, Qs is the quantity supplied and P is the price Suppose that the government decides to impose a tax of $12 per unit on sellers in this market. Determine demand the seller’s price after tax. Given the following information: QD = 240 – 5P QS = P Where QD is the quantity demanded, Qs is the quantity supplied and P is the price Suppose that the government decides to impose a tax of $12 per unit on sellers in this market. Determine the quantity after taxarrow_forwardUsing your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method.arrow_forwardSuppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.8 and 0.7 respectively. Suppose the government imposes a per-unit tax of $45 on the cigarette sellers. By how much would buyers share the tax burden respectively? Show your calculation.arrow_forward
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