Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 8, Problem 7PA
Subpart (a):
To determine
The impact of tax on the market of socks.
Sub part(b):
To determine
The impact of tax on the market of socks.
Sub part(c):
To determine
The impact of tax on the market of socks.
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If the government wants to raise tax revenue, which of the following items are good candidates for an excise tax?
Choose one or more: A. toilet paper B. automobile tires C. cigarettes D. sweet potatoes
Suppose the federal government requires beer drinkers to pay a $2 tax on each case of beer purchased.
a.Draw a supply and demand diagram of the market for beer without the tax.Show the price paid by consumers ,the price received by producers,and the quantity of beer sold.What is the difference between the price paid by consumers and the price received by the producers?
b.Now draw a supply and demand diagram for the beer market with the tax.Show the price paid by consumers ,the price received by producers,and the quantity of beer sold.What is the difference between the price paid by consumers and the price received by the producers?Has the quantity of beer sold increased or decreased?
Suppose the federal government requires beer drinkers to pay a $2 tax on each case of beer purchased.
a. Draw a supply and demand diagram of the market for beer without the tax. Show the price paid by consumers, the price received by producers and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by produers?
b.Draw a supply and demand diagram for the beer market with the tax. Show the price paid by consumers, the price received by producers and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers? Has the quantity of beer sold increased or decreased?
C. Can you identify and government revenues?
d. Is there and inefficiency, and if so, can you define it and label it on the graph?
e. If the producer has an inelastic supply curve, which market participant has the bigger tax brden? Explain.
Chapter 8 Solutions
Principles of Microeconomics (MindTap Course List)
Ch. 8.1 - Prob. 1QQCh. 8.2 - The demand for beer is more elastic than the...Ch. 8.3 - Prob. 3QQCh. 8 - Prob. 1CQQCh. 8 - Prob. 2CQQCh. 8 - Prob. 3CQQCh. 8 - Prob. 4CQQCh. 8 - Prob. 5CQQCh. 8 - Prob. 6CQQCh. 8 - Prob. 1QR
Ch. 8 - Prob. 2QRCh. 8 - Prob. 3QRCh. 8 - Why do experts disagree about whether labor taxes...Ch. 8 - What happens to the deadweight loss and tax...Ch. 8 - Prob. 1PACh. 8 - Prob. 2PACh. 8 - Prob. 3PACh. 8 - Prob. 4PACh. 8 - Prob. 5PACh. 8 - Prob. 6PACh. 8 - Prob. 7PACh. 8 - Prob. 8PACh. 8 - Prob. 9PACh. 8 - Prob. 10PA
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Similar questions
- In a market where the supply curve is perfectly inelastic how does an excise tax affect the price paid by consumers and the quantity bought and sold?arrow_forwardHow does a tax on a good affect the price paid by buyers, price receive by sellers, and the quantity sold?arrow_forwardBased on the diagram, what is the consumer's burden of the tax? $ Price 200- What is the producer's burden of the tax? $ 180- S' What is the amount of the tax? $ 160- IS 140- .... . The burden of the tax is producers because the elasticity of demand the 120- elasticity of supply. 100- 80- is less than 60- exceeds 40- 20- 0- 20 40 60 80 100 120 140 160 180 D.arrow_forward
- Q Sea Aplia Homework: Elasticity of Demand and Supply The following graph shows the daily market for jeans when the tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $5.80 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then, enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool 50 Market for Jeans 45 I Quantity (Pairs of jeans) 50 40 Supply Demand Price (Dollars per pair) Supply Price (Dollars per pair) 75.00 17.00 35 30 25 Supply…arrow_forward1. Discuss the impact of the imposition of a tax (on the seller). What happens to the following? a. How does elasticity impact the incidence of a tax 2. Discuss two unintended effects of a price ceiling?arrow_forwardWhich of the following statements about the relationship between elasticity and tax incidence are true ?Choose one or more: A.The incidence of a tax depends on who the tax is placed on. B.When demand is more inelastic than supply, consumers bear more of the incidence of a tax. C.A tax on a good for which both demand and supply are relatively inelastic will cause a relatively large transfer of welfare from consumers and producers to the government. D.When demand is more inelastic than supply, producers bear more of the incidence of a tax. E.If a tax is imposed on a good with a perfectly inelastic demand, then consumers bear the full incidence of the tax. Note:- 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.arrow_forward
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