Suppose a local government votes to impose an excise tax of $0.90 per bottle on the sales of bottled water. (Assume that all bottles are identical and residents cannot shop elsewhere.) Before the tax the equilibrium price and quantity are $1.20 and 2100 bottles per day. After the tax is imposed, market equilibrium adjusts to a price of $2.00 and quantity of 1400 bottles per day. How much revenue from the tax does the local government collect each day?
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- Suppose a local government votes to impose an excise tax of $1.00 per bottle on the sales of bottled water. (Assume that all bottles are identical and residents cannot shop elsewhere.) Before the tax the equilibrium price and quantity are $1.20 and 1900 bottles per day. After the tax is imposed, market equilibrium adjusts to a price of $1.80 and quantity of 1400 bottles per day. a. Draw the supply and demand diagram before and after the excise tax is imposed. 1.) Using the line drawing tool, plot the original and new supply curves and label the lines properly. 2.) Using the point drawing tool, indicate the original and new equilibrium points and label these points properly. Carefully follow the instructions above, and only draw the required objects. CH Price ($ per bottle) 3.00- 2.80- 2.60- 2.40- 2.20- 2.00- 1.80- 1.60- 1.40- 1.20- 1.00- 0.80- 0.60- 0.40- 0.20- 0.00 0 1000 2000 Quantity (bottles per day)Suppose that demand for gasoline is 0.5 (Ed=0.5) and the supply of gasoline pizza is 1.25 (E, = 1.25). If the government imposes a $1 per gallon excise tax on the production of gasoline, then the price that consumers pay will and the price that producers receive will O increase by more than $0.50; decrease by more than $0.50. O increase by more than $0.50, but less than $1; increase by more than $0.50, but less than $1. increase by more than $0.50, but less than $1; decrease by less than $0.50. decrease by more than $0.50, but less than $1; increase by less than $0.50. increase by less than $0.50; decrease by more than $0.50, but less than $1.The demand and supply equations for a product are: Q^d=300-6p and Q^x=-40+6p. . Determine the market Equilibrium and draw graphs. Suppose that the government decides to impose a flat tax of 10% on each unit sold. Show that the price that consumers pay would be the same if the government imposed a tax of Rs. 1.70 per unit sold. Draw graph and explain . Also calculate the total revenue earned by sellers before and after the tax, the tax revenue raised by the government, changes in consumer and producers surplus and dead weight loss
- Suppose that before tax was imposed 400 million gallons of gasoline was supplied at $3.00 per gallon.⦁ What happens when government imposes a tax of 60 cents per gallon on sellers? ⦁ How would such a tax affect the market for gasoline i.e. what is the new equilibrium? ⦁ On whom does the incidence of the tax fall more heavily? ⦁ How much government revenue will be generated by the excise tax? ⦁ What happens when government imposes a tax of 60 cents per gallon on buyers? ⦁ How would such a tax affect the market for gasoline i.e. what is the new equilibrium? PLease answer the parts above:)Suppose that the local government of Santa Fe decides to institute a tax on soda consumers. Before the tax, 45,000 liters of soda were sold every week at a price of $10 per liter. After the tax, 38,000 liters of soda are sold every week; consumers pay $14 per liter (including the tax), and producers receive $8 per liter. The amount of the tax on a liter of soda is 3 that falls on producers is 5 per liter. True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. True per liter. Of this amount, the burden that falls on consumers is 3 O False per liter, and the burdenSuppose that the U.S. government decides to charge cola producers a tax. Before the tax, 30,000 cases of cola were sold every week at a price of $6 per case. After the tax, 23,000 cases of cola are sold every week; consumers pay $9 per case, and producers receive $4 per case (after paying the tax). The amount of the tax on a case of cola isper case. Of this amount, the burden that falls on consumers isper case, and the burden that falls on producers isper case. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers. True False
- The market for skateboards currently has no taxes. The equilibrium quantity is 5,000/month, and the equilibrium price is $40. The governor is considering placing a $10/skateboard tax on skateboard producers, and expects to raise $50,o00/month in revenue. Is the governor correct? O Yes, because producer and consumer responses will cancel out. O No, because the quantity produced and consumed will fall below 5,000/month once the tax is imposed. O No, because it doesn't matter whether the consumer or producer is taxed. O Yes, because 5,000 x $1O = $50,000.Suppose demand is D and supply is S0 so that equilibrium price is $10. If an excise tax of $6 is imposed on this product, what happens to the equilibrium price paid by consumers? The price received by producers? The number of units sold?Equilibrium price paid by consumers: $ Price received by producers: $ Number of units sold:1. What is the equilibrium price and quantity? 2. Suppose the government imposes a tax of $1.00 on each water bottle. Complete the column showing quantity supplied after the tax. (Hint: at a price of $8.00 the quantity supplied was 36000. With the tax, this quantity supplied will be supplied only at a price of $9.00, so the Quantity supplied with a tax at 9.00 is 36000) You continue, so at $8.50, the producer only gets 7.50. so is only willing to offer 32000 units. Qd Price 000s) $9.00 20 8.50 8.00 7.50 7.00 6.50 6.00 24 28 32 36 40 44 Qs (000s) 44 40 38 32 28 24 20 Quantity supplied after tax Qs(t) (000s) 36 32 Price 28 24 3. On your graph, plot the new supply curve after the imposition of the tax (in a different colour, to differentiate the supply curve). 4. What will be the new equilibrium price and quantity? 5. How much of the tax is passed onto the consumers in the form of price increase, and how much is paid by the producers? Indicate the producer and consumer burden on your…
- Suppose that the local government of Columbus decides to institute a tax on soda producers. Before the tax, 30 million liters of soda were sold every month at a price of $9 per liter. After the tax, 23 million liters of soda are sold every month; consumers pay $14 per liter, and producers receive $6 per liter (after paying the tax). The amount of the tax on a liter of soda is $ that falls on producers is $ per liter. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers. True per liter. Of this amount, the burden that falls on consumers is $ False per liter, and the burdenConnect Problem 06-21 The equilibrium price of a pair of earbuds is $30 per unit. Assume now that a tax of $20 is placed on each pair of earbuds. Given the graph below, answer the questions that follow. Price per pair 60 50 40 30 20 10 Market for Bluetooth Earbuds 0 1 2 B 3 4 Quantity E 5 6 D 7 8 a) Before the tax, what is the equilibrium price per pair of earbuds? $ b) According to the graph, after the tax, what is the price a buyer must pay for a pair of earbuds? $ c) According to the graph, after the tax, how much does the seller receive for a pair of earbuds? $ d) What happens to the quantity demanded after the tax? decrease 30Attached is a graph diagram depicting the market for soft drinks. If an excise tax equal to $1 per liter is levied on soft drink sellers, please answer the following questions: a. The new equilibrium quantity of soft drinks bought and sold would be ___________ million liters. b. The new equilibrium price paid by buyers of soft drinks would be $__________ per liter. c. The new equilibrium price received by sellers (after-tax) would be $__________ per liter.