Show graphically and explain why a government is more likely to place an excise (per unit)...
Show graphically and explain why a government is more likely to place an excise (per unit) tax on a good with inelastic demand than it is to put an excise tax on a good with elastic demand
Homework Answers
Inelastic demand is a type of demand in which even there is a very high change in the price but quantity demanded change is very less
elastic demand is a type of demand in which there is a little change in the price but causes every change in the quantity demanded
So if a demand is inelastic demand then the government knows that their quantity demanded will be always high whether price high or low
For taking benefit t,government mostly put excise taxes on it because they are the basic needs which will always be demanded
The best example of this is gasoline
But if a demand is elastic demand then it is very price sensitive which means a consumer may demand it very less if price goes heights or excise taxes are high so government do not put very high taxes on elastic goods
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Show graphically and explain why a government is more likely to
place an excise (per unit)...
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From a revenue-maximizing viewpoint, explain why the government would be more likely to impose excise taxes on cigarettes and beer rather than on mangoes and mineral water?
The graph below shows the market for office rental space. A $400 per month excise tax...
The graph below shows the market for office rental space. A $400
per month excise tax is imposed on firms selling office space. D is
the demand curve, S1 is the supply curve in the absence of the tax,
and S2 represents the supply curve that includes the tax.
The graph below shows the market for office rental space. A $400 per month excise tax is imposed on firms selling office space. D is the demand curve, S1 is the...
Suppose the Canadian government has decided to place an excise (or sales) tax of $20 per...
Suppose the Canadian government has decided to place an excise
(or sales) tax of $20 per tire on producers of automobile tires.
Previously, there was no excise tax on automobile tires. As a
result of the excise tax, producers of tires, such as Bridgestone
and Michelin, are going to alter their tire prices. The graph
illustrates the demand and supply curves for automobile tires
before the excise tax. 1. Please shift the appropriate curve(s) on
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12. Government pays attention to the elasticity of demand when selecting foods and services upon which...
12. Government pays attention to the elasticity of demand when selecting foods and services upon which to levy excise taxes. Assume a $1.00 tax is levied on some good and 10,000 units are sold. What is the tax revenue collected? Now, assume the government raises the tax to $1.50. This causes sales to decline to 5,000 units. Calculate the price (tax) elasticity of demand. Is it elastic, inelastic, or unit elastic? What happens to total tax revenue? Based on your...
21. Suppose the government imposes a S9 per unit tax on the production of Good Z....
21. Suppose the government imposes a S9 per unit tax on the production of Good Z. If the demand curve for Good Z is perfectly inelastic and the supply curve is upward-sloping, the price that consumers pay for the good will: A) increase by S9. B) increase by S4.50. C) increase by more than S9.
1-3 please Feel free to use any spaces for scratch work. 1) Consider the excise tax lectured in class. For a given e...
1-3
please
Feel free to use any spaces for scratch work. 1) Consider the excise tax lectured in class. For a given excise tax, we can correctly predict that consumer tax incidence will be less than producer tax incidence when: a) Both the demand and the supply curves are more inelastic. b) The demand curve is inelastic and the supply curve is elastie. c) The demand curve is elastic and the supply curve is inelastic. d) Both the demand and...
Good X costs $12 and Good Y costs $8. The government places an excise (per unit)...
Good X costs $12 and Good Y costs $8. The government places an excise (per unit) tax of $4 on both goods. What happens to the relative price of Y compared to X? The price of Y falls relative to the price of X. Nothing, since the price of each rises by $4. The price of Y rises relative the price of X since it costs more. None of the other answers are correct.
Graphically show and explain how each of the conditions below will affect the market for a...
Graphically show and explain how each of the conditions below will affect the market for a generic manufactured good: a) The excise tax for the product is increased. b) The firm spends more on advertising its product. c) Consumers expect the economy to go into a recession in the near future. d) The population increases.
When the government decides to impose a tax on sellers of a good or service, sellers...
When the government decides to impose a tax on sellers of a good or service, sellers try to pass the tax on to consumers by raising the price of the good being sold. Assume the government decides to place a $1 tax on each unit of a good sold, e.g., tires. Using the simple model of supply and demand, describe what would happen to the price and quantity of tires sold. Would the amount of tax paid by the consumer...
1) In your own words, explain what elasticity of supply is signifying. (Put in your own...
1) In your own words, explain what elasticity of supply is signifying. (Put in your own words – just don’t copy and paste the notes.) 2) Explain why a tax levied on a good with elastic supply will bring in less revenue for the government than one placed on a good with inelastic supply. 3) Briefly explain why both the Elasticity of Demand and the Elasticity of Supply are greater (that is, more elastic) at longer time horizons compared...
The graph below shows the market for office rental space. A $400
per month excise tax is imposed on firms selling office space. D is
the demand curve, S1 is the supply curve in the absence of the tax,
and S2 represents the supply curve that includes the tax.
The graph below shows the market for office rental space. A $400 per month excise tax is imposed on firms selling office space. D is the demand curve, S1 is the...
Suppose the Canadian government has decided to place an excise
(or sales) tax of $20 per tire on producers of automobile tires.
Previously, there was no excise tax on automobile tires. As a
result of the excise tax, producers of tires, such as Bridgestone
and Michelin, are going to alter their tire prices. The graph
illustrates the demand and supply curves for automobile tires
before the excise tax. 1. Please shift the appropriate curve(s) on
the graph to demonstrate the...
21. Suppose the government imposes a S9 per unit tax on the production of Good Z. If the demand curve for Good Z is perfectly inelastic and the supply curve is upward-sloping, the price that consumers pay for the good will: A) increase by S9. B) increase by S4.50. C) increase by more than S9.
1-3
please
Feel free to use any spaces for scratch work. 1) Consider the excise tax lectured in class. For a given excise tax, we can correctly predict that consumer tax incidence will be less than producer tax incidence when: a) Both the demand and the supply curves are more inelastic. b) The demand curve is inelastic and the supply curve is elastie. c) The demand curve is elastic and the supply curve is inelastic. d) Both the demand and...
Good X costs $12 and Good Y costs $8. The government places an excise (per unit) tax of $4 on both goods. What happens to the relative price of Y compared to X? The price of Y falls relative to the price of X. Nothing, since the price of each rises by $4. The price of Y rises relative the price of X since it costs more. None of the other answers are correct.
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