Homework Answers
Ans7) the correct option is b) buyer ; smaller
Ans8) the correct option is a) greater ; smaller ; greater
Ans9) the correct option is c) creates a difference between the price paid by the buyer and the price received by seller.
Ans10) the correct option is d) price leads to greater total revenue.
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7. A) o If demand is inelastic, the tax burden falls primarily on the ___ and...
9. A tax on a product A) has no impact on quantity demanded B) always decreases...
9. A tax on a product A) has no impact on quantity demanded B) always decreases quantity demanded more than quantity supplied. C) creates a difference between the price paid by the buyer and the price received by the seller D) usually has a negligible burden 10. Other things constant, when demand is price inelastic an increase in A) the price leads to lower total revenue B) total revenue means that quality will improve C) total revenue leads to a...
The buyer pays most of a tax if demand is relatively inelastic because O A. the...
The buyer pays most of a tax if demand is relatively inelastic because O A. the buyer cannot easily substitute to other markets. O B. the government forces the seller to bear the burden of the tax. O C. there is a black market for this good. O D. the buyer can easily substitute to other markets. O E. the seller cannot easily substitute to other goods.
A market for baby bottles has the following supply and demand functions qS = −6 +...
A market for baby bottles has the following supply and demand functions qS = −6 + 3p qD = 14 − 2p a. Now, suppose a per unit tax of 5 were charged to the buyer. What are the equilibrium quantity, price paid by the buyer, and price received by the seller? b. How much tax revenue is raised? How much of that tax burden is borne by the buyer? c. Calculate the Consumer Surplus, Producer Surplus, Total Welfare Level,...
A market for baby bottles has the following supply and demand functions qS = −6 +...
A market for baby bottles has the following supply and demand functions qS = −6 + 3p qD = 14 − 2p a) Calculate the Consumer Surplus, Producer Surplus, and Total Welfare levels. b) Now, suppose a per unit tax of 5 were charged to the buyer. What are the equilibrium quantity, price paid by the buyer, and price received by the seller? c) Mathematically, does it make a difference if the tax is applied to the buyer or the...
68. AFC: A) will fall in the early stages of production but rise when capacity is maximized. B) is constant at any give...
68. AFC: A) will fall in the early stages of production but rise when capacity is maximized. B) is constant at any given level of output. C) falls continuously as output increases. D) increases due to diminishing marginal returns. 48. If a firm has $10,000 in variable costs and no fixed cost, then the time period referred to is the: A) market period. B) short run. C) long run. D) very long run 43. A decrease in the price of...
1. Draw how the burden of the tax is distributed under the following scenarios: a) Inelastic...
1. Draw how the burden of the tax is distributed under the following scenarios: a) Inelastic demand and elastic supply b) Elastic demand and inelastic supply c) Relative elasticities of demand and supply are similar In each diagram, clearly label: equilibrium price before the tax. price paid by buyers after the tax, price received by sellers after the tax, portion of tax burden on consumers, and portion of tax burden on producers. 2. What happens to the amount of deadweight...
1. Suppose the price elasticity of demand for farm products is inelastic and the federal government...
1. Suppose the price elasticity of demand for farm products is inelastic and the federal government wants to follow a policy of increasing income for farmers. To accomplish this goal, the government will promote the programs that.........(increase or decrease) the price of farm products, knowing that the percentage change in price will be......…...(exactly the same as, Greater than, or smaller than) the percentage........(increase or Decrease) in quantity. 2. Suppose the price elasticity of demand for used cars is estimated to...
4 (a) Use diagrams to explain how the burden of a sales tax (levied on the...
4 (a) Use diagrams to explain how the burden of a sales tax (levied on the seller) falls on the buyer and the seller of a good. Under what conditions will the consumer pay most of the tax? (b) Suppose that the market for ice-cream can be described by the following equations: Demand: P 10-Q Supply: P-Q-4 where P is the price in euro per unit and Q is the quantity in thousands of units. Find the equilibrium price and...
. (a) Use diagrams to explain how the burden of a sales tax (levied on the...
. (a) Use diagrams to explain how the burden of a sales tax (levied on the seller) falls on the buyer and the seller of a good. Under what conditions will the seller pay most of the tax? (b) Suppose that the market for chocolate can be described by the following equations: Demand:Q-12-P Supply:Q-P+4 where P is the price in euro per unit and Q is the quantity in thousands of units. Find the equilibrium price and quantity. Suppose the...
Which of the following is a true statement? A. If demand is inelastic and the price...
Which of the following is a true statement? A. If demand is inelastic and the price increases, the total revenue will increase. OB. If demand is inelastic and the price increases, the total revenue will decrease. C. If demand is elastic and the price increases, the total revenue will increase. D. If demand is elastic and the price decreases, the quantity demanded will decrease. Reset Selection MacBook Air
9. A tax on a product A) has no impact on quantity demanded B) always decreases quantity demanded more than quantity supplied. C) creates a difference between the price paid by the buyer and the price received by the seller D) usually has a negligible burden 10. Other things constant, when demand is price inelastic an increase in A) the price leads to lower total revenue B) total revenue means that quality will improve C) total revenue leads to a...
The buyer pays most of a tax if demand is relatively inelastic because O A. the buyer cannot easily substitute to other markets. O B. the government forces the seller to bear the burden of the tax. O C. there is a black market for this good. O D. the buyer can easily substitute to other markets. O E. the seller cannot easily substitute to other goods.
68. AFC: A) will fall in the early stages of production but rise when capacity is maximized. B) is constant at any given level of output. C) falls continuously as output increases. D) increases due to diminishing marginal returns. 48. If a firm has $10,000 in variable costs and no fixed cost, then the time period referred to is the: A) market period. B) short run. C) long run. D) very long run 43. A decrease in the price of...
1. Draw how the burden of the tax is distributed under the following scenarios: a) Inelastic demand and elastic supply b) Elastic demand and inelastic supply c) Relative elasticities of demand and supply are similar In each diagram, clearly label: equilibrium price before the tax. price paid by buyers after the tax, price received by sellers after the tax, portion of tax burden on consumers, and portion of tax burden on producers. 2. What happens to the amount of deadweight...
4 (a) Use diagrams to explain how the burden of a sales tax (levied on the seller) falls on the buyer and the seller of a good. Under what conditions will the consumer pay most of the tax? (b) Suppose that the market for ice-cream can be described by the following equations: Demand: P 10-Q Supply: P-Q-4 where P is the price in euro per unit and Q is the quantity in thousands of units. Find the equilibrium price and...
. (a) Use diagrams to explain how the burden of a sales tax (levied on the seller) falls on the buyer and the seller of a good. Under what conditions will the seller pay most of the tax? (b) Suppose that the market for chocolate can be described by the following equations: Demand:Q-12-P Supply:Q-P+4 where P is the price in euro per unit and Q is the quantity in thousands of units. Find the equilibrium price and quantity. Suppose the...
Which of the following is a true statement? A. If demand is inelastic and the price increases, the total revenue will increase. OB. If demand is inelastic and the price increases, the total revenue will decrease. C. If demand is elastic and the price increases, the total revenue will increase. D. If demand is elastic and the price decreases, the quantity demanded will decrease. Reset Selection MacBook Air
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