Suppose the supply curve for cars is more elastic than the demand curve for cars.  If the government imposes a tax on car sellers, which party (buyers or sellers) will bear more of the tax burden?  How will the tax burden change if the government imposed the tax on car buyers, rather than sellers?

Q: Give an example of a product that has inelastic demand and elastic supply in the market to price. If…

A: An inelastic demand is defined as one where a change in price does not significantly impact demand…

Q: Fill in the following table with the quantity sold, the price buyers pay, and the price sellers…

A: Quantity Price buyers pay Price sellers receive Before Tax 250 $ 25 $25   After…

Q: When a good is taxed, the burden of the tax fallsmainly on consumers ifa. the tax is levied on…

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Q: If buyers are required to pay a tax on top of the price, buyers' willingness to pay will:…

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Q: Assume that the price of soft drinks is $5 and the government decides instead to impose a $1 tax per…

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Q: If the government wants to use a Pigouvian tax to alleviate the problem of obesity contagion, what…

A: We are going to discuss ways to minimize negative externalities.

Q: Daniel and Jacob like soda drinks. Jacob's demand for soda is: P=10-Q; the demand for Daniel is…

A: Demand and supply forces in the market interact to give the market equilibrium condition. A tax…

Q: When supply is perfectly elastic, who bears the burden of tax? Select one: a. producers b.…

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Q: The law of demand states the basic price/quantity relationship of consumption incentives. What does…

A: Meaning of Law of Demand: The term law of demand states that when there is an increase in the…

Q: If we want to increase the cigarette tax to promote environmentally-friendly behavior, the tax will…

A: If we simply consider smoking, it is hard as the demand for cigarette is always inelastic.

Q: Suppose the California legislature passed a sweeping law to lower the number of regulations for…

A:

Q: why do comsumers pay the tax on goods if the elasticity of demand is less than the elasticty of…

A: Demand is said to be inelastic when the change in price leads a change in quantity demanded in…

Q: Green et al. (2005) estimate that the demand elasticity is -0.47 and the long-run supply elasticity…

A:

Q: A government intervenes in a market and as a result the demand curve shifts to the right. Which…

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Q: Suppose the market for cigarette is competitive. An economist estimates the price elasticity of…

A: It is given that elasticity of demand= -0.8, and elasticity of supply=0.7 is inelastic in nature.…

Q: The demand and the supply for a good are each neither perfectly elastic nor perfectly inelastic. If…

A: A tax is a financial charge being levied by any government upon an individual or an organization for…

Q: What is the tax incidence of an excise tax when demand is highly inelastic and highly elastic?

A: When appropriate the government can intervene in a market by levying excise tax in order to…

Q: Comparing the market for Airbnb rentals for the two years is complicated by the fact that the graph…

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Q: Using the data you entered in the previous table, calculate the tax burden that falls on buyers and…

A:

Q: Suppose the demand curve for a good is highly elastic and the supply curve is highly inelastic. If…

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Q: Suppose a tax is imposed on a product that has a completely inelastic supply curve. Who pays the tax

A: Elasticity of supply curve depicts how much producer responds with the change in the price level.

Q: Suppose the market for cigarette is competitive. An economist estimates the price elasticity of…

A: Tax burden of buyers = Es / (Es - Ed), where Ed: Elasticity of demand Es: Elasticity of supply

Q: Fill in the following table with the quantity sold, the price buyers pay, and the price sellers…

A: Quantity Price buyers pay Price sellers receive Before Tax 250 $ 25 $25   After…

Q: The demand for mineral water is P=10 – (2/3) Q and supply function for mineral water isP=1+(1/3)Q…

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Q: If a tax is levied on the seller of a product the demand curve will shift downward will not change…

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Q: Suppose an economist estimates the price elasticity of demand for sugary drinks is -4.2, while its…

A: Elasticity shows how responsive is quantity to changes in price level.

Q: Does a tax on buyers affect the demand curve?

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Q: Richard and Henry like soda drinks. Henry's demand for soda is: P=10-Q; the demand for Richard is…

A: Without tax Henry Richard Demand for soda=P=10-Q supply for soda=P=1 Optimum profit is…

Q: Neither the supply of nor the demand for a good is perfectly elastic or perfectly inelastic.…

A: Placing a tax on a good, shifts the supply curve to the left. It leads to a decrease in demand and…

Q: Congress and the president decide that the United States should reduce air pollution by reducing its…

A: Tax:Tax is a compulsory payment which is imposed by the government. It is the main source of revenue…

Q: Complete the following table with the tax revenue collected and deadweight loss caused by each of…

A: Deadweight loss is caused due to the inefficiency in the market. It occurs when the equilibrium for…

Q: Complete the following table with the tax revenue collected and deadweight loss caused by each of…

A: Tax revenue is the revenue received by the government due to the tax imposed. Deadweight loss is due…

Q: Consider the effect of the anti-smoking campaign to be funded by proceeds of the cigarette tax. If…

A: The demand curve for a commodity can be shifted as a result of change in taste and preference.…

Q: Suppose that the demand and supply functions for a good are given as follows: Demand: Q =1080 - 7P…

A: Price elasticity of supply depicts how much producer responds with the change in the price level.

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A: Consumer well-off facing a quantity tax in the case of the kinked demand curve for the complement…

Q: Suppose the California legislature passed a sweeping law to lower the number of regulations for…

A: In this case sweeping law will empowers California government to make necessary law and give proper…

Q: As price elasticity of demand increases, the burden of a tax gets _______; as price elasticity of…

A: Price elasticity of demand: It can be define as the ration of percentage change in quantity demanded…