Suppose the following graph depicts the supply and demand for a good after a tax is imposed. How much surplus is lost because of the tax? None Price P₁ O An amount equal to the tax. 9€ Demand Curve Tax both producers and consumer lose all surplus. Supply Curve plus tax Supply Curve Quantity Othere is no way to tell since the demand curve is odd looking.
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- Effect of a tax on buyers and sellers The following graph shows the daily market for jeans. Suppose the government institutes a tax of $10.15 per pair. This places a wedge between the price buyers pay and the price sellers receive. 0100200300400500600700800900100050454035302520151050PRICE (Dollars per pair)QUANTITY (Pairs of jeans)Tax WedgeDemandSupply Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity Price Buyers Pay Price Sellers Receive (Pairs of jeans) (Dollars per pair) (Dollars per pair) Before Tax After Tax Using the data you entered in 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. Enter your results in the following table. Tax Burden Elasticity…18. The U.S. Senate is considering a bill that would tax the sale of laptop computers in order to fund a computer educa- tion program for presidential hopefuls. The Congressional Budget Office (CBO) estimates that if it implements a low tax of $12 per laptop, revenue should be sufficient to exactly fund the program. The CBO also estimates that a high tax of $230 per laptop will exactly fund the program. a. How can a low tax and a high tax raise exactly enough money to fund the program? Illustrate your answer using a graph. b. Suppose that you are an economic advisor to the Senate Finance Committee, tasked with analyzing the economic impact of the tax proposals. Which proposal do you recommend, and why?ECON1000 - Principles of Economics 1 | S1 21/22 Time left 0:13:59 A tax is imposed on producers of a good. For a given supply curve, the more price elastic the demand for the product, the greater the tax incidence on uestion 16 t yet Swered ked out of Select one: a. producers.. b. the tax payer. C. consumers. O d. both consumers and producers equally. page Next page
- Suppose Jolene buys apples weekly. If the price of apples were to drop, Jolene would experience in . a decrease an increase a decrease an increase a decrease total revenue consumer surplus her budget constraint marginal utility willingness to pay Suppose the government levies a tax of $0.50 per pack on the buyers of cigarettes. Suppose also that the price elastic- ity of demand for cigarettes is 1.2 and the price elasticity of supply is 0.7. Because this tax is levied on the sale of a specifi c good, it is an excise tax. a progressive tax. a regressive tax. a proportional tax. a lump-sum tax. After this tax is levied, total surplus will , and the price received by producers (not including the tax) will . increase decrease increase decrease increase increase by exactly $0.50 fall by exactly $0.50 fall by less than $0.50 fall by less than $0.50 increase by more than $0.50 If economists were to study the tax incidence in this cigarette market, they would…Macmillan Learning The graph shows the demand and supply of bungee jumps in Xtremeland. The government decides to impose an excise tax on bungee jumps to help pay for the high number of back and neck injuries. What would the government's tax revenue be if it imposes a tax of $80 on each jump? What would the government's tax revenue be if it imposes a tax of $40 on each jump? S What would the government's tax revenue be if it imposes a tax of $120 on each jump? $ S Price of bungee jumps ($) 200 Supply 180 160. 140 120- 100. 80 60. 40 20 0 10,000 30,000 50,000 Quantity of bungee jumps Demand 70,000Suppose a tax is levied in the market for soda. Consider a $0.50 excise tax on producers for each soda sold. The graph illustrates the demand and supply curves for soda both before and after the tax is levied. Use the graph below to answer the remaining parts of this question. d. What is the consumer surplus generated after the imposition of the tax? Shade in this area on the graph. Instructions: Use the tool provided “CStax” to illustrate this area on the graph. Consumer surplus after the imposition of the tax is $ thousand. e. What is the producer surplus generated after the imposition of the tax? Shade in this area on the graph. Instructions: Use the tool provided “PStax” to illustrate this area on the graph. Producer surplus after the imposition of the tax is $ thousand. f. What is the total revenue generated from the tax? Shade in this area on the graph. Instructions: Use the tool provided “TR” to illustrate this area on the graph. Tax…
- Suppose the government removes a tax on buyers of a good and levies a tax ofthe same size on sellers of the good. How does this change in tax policy affectthe price that buyers pay sellers for this good, the amount buyers are out ofpocket including the tax, the amount sellers receive net of tax, and the quantityof the good sold?7. Effect of a tax on buyers and sellers The following graph shows the daily market for jeans. Suppose the govermment institutes a tax of $23.20 per pair. This plae price buyers pay and the price sellers recelve. 100 90 Supply Tax Wedge 50 40 30 20 10 Demand 10 20 40 50 60 70 100 QUANTITY (Pairs of jeans) R8S PRICE (Dollars per pair)Energy drinkS has been causing death.because of consumpti on Senator Miller proposes $ 2 tax ( that on average cost $ 2.:5D) on the arinks. Senator cruz thinks IK too high. In response, the Miller Bill was fixed to make it a $ 1 tax. 1. DRALD A CRAPH. LOcate the tax Ruene and indicate which letterd rgions show that on the graph. Does the concumer or producer pay more ot the tax 2
- The accompanying graph depicts a hypothetical market for salt. Suppose that an excise or commodity tax is levied on consumers in an attempt to curb blood pressure problems. Show the effect of the tax by shifting the appropriate curve(s). Macmillan Learning Who has the larger tax burden? Consumers (buyers) Producers (suppliers) The tax burdens are equal Why is the tax burden as you described in in the question above? Consumers are the ones paying the tax. Demand is less elastic than supply. Both supply and demand are perfectly elastic. Supply is less elastic than demand. Demand is more elastic than supply. Price (S/kilogram) 9 3 Market for Salt D 4 5 Quantity (in kilograms). S 10Suppose the government applies a specific tax to a good where the demand elasticity is -0.8, and the supply elasticity is 1.4. If a specific tax of $3.25 was placed on the good, to the arest cent, what is the price increase that consumers would pay? What is the tax incidence? IThe demand for salt is price inelastic and the supply of salt is price elastic. The demand for caviar is price elastic and the supply of caviar is price inelastic. Suppose that a tax of $1 per kilogram is levied on the sellers of salt and a tax of $1 per kilogram is levied on the buyers of caviar. Who would we expect to have to pay most of these taxes? Question 29Answer a. the sellers of salt and the sellers of caviar b. the buyers of salt and the buyers of caviar c. the sellers of salt and the buyers of caviar d. the buyers of salt and the sellers of caviar