Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 8.2, Problem 2QQ
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- Who would pay a tax imposed on the supplier when the price elasticity of supply is inelastic and the price elasticity of demand is elastic?arrow_forwardQuestion 28 As part of a health program, a city imposes a tax on soda pop. We would expect consumers to pay almost all of this tax if demand is what? a inelastic and supply is inelastic b inelastic and supply is elastic c elastic and supply is elastic d elastic and supply is inelasticarrow_forwardA local government is seeking to impose a specific tax on hotel rooms. The price elasticity of supply of hotel rooms is 3.5, and the price elasticity of demand is 0.3. If the new tax is imposed, who will bear the greater burden-hotel suppliers or hotel consumers? The hotel consumers pay percent and hotel suppliers pay percent of the tax. (Enter your responses rounded one decimal place.)arrow_forward
- 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.arrow_forwardSuppose an economist estimates the price elasticity of demand for instant noodle is -2.4, while its price elasticity of supply is 4.0. If the government decides to impost a per-unit sales tax of $16 per pack of instant noodle, how would the market price for instant noodle be affected? Show your calculation.arrow_forwardI need help working through the elasticity of demand and supply for this problem.arrow_forward
- Suppose producers bear most of the burden of a specific tax of 20 cents on staplers. Which ONE statement best describes the supply and demand for staplers? Suppose sandals have an elastic own-price elasticity of demand. If price goes up by 2%, then what happens to quantity demanded?arrow_forwardA city government decides to tax hotel rooms to raise money. Before the tax, 1000 rooms were typically rented out per month. After the tax, the number of rooms rented per month falls to 900, the amount paid by hotel guests rises to $130 and the amount received by sellers falls to $110 per room. If the price per hotel room was $100 per night before the tax, which of the following can we conclude? The supply of hotel rooms is more price elastic than is the demand The demand for hotel rooms is more price elastic than is the supply The supply of hotel rooms after the tax is greater than the demand for hotel rooms The demand for hotel rooms after the tax is greater than the supply of hotel rooms We cannot conclude any of the options given with only the information provided.arrow_forwardIf a tax of $1.20 is imposed on consumers in this market, what is the tax revenue?arrow_forward
- Demand for a good is perfectly ELASTIC while supply is regularly shaped. Suppose the government taxes the good. Which of the following statements is true: A. The tax will create deadweight loss B. The tax will NOT create deadweight lossarrow_forwardSuppose households supply 560 billion hours of labor per year and have a tax elasticity of supply of 0.15. If the tax rate is increased by 10 percent, by how many hours will the supply of labor decline?arrow_forwardthe demand for beer is more elastic than the demand for milk. would a tax on beer or a tax on milk have a larger deadweight loss? why?arrow_forward
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