Question

2)

The vertical distance between points A and B represents the original tax. 1 Price 12 11 F 10 S 9 8 с 7 6 S 4 3 G 2 1 D + + 455 051 152 253 35 4 Quantity Refer to the Figure. If the government changed the per-unit tax from $5.00 to $7.50, then the price paid by buyers would be $10.50, the price received by sellers would be $3, and the quantity sold in the market would be 0.5 units. Compared to the original tax rate, this higher tax rate would A. increase government revenue and increase the deadweight loss from the tax. B. increase government revenue and decrease the deadweight loss from the tax. C. decrease government revenue and increase the deadweight loss from the tax. D. decrease government revenue and decrease the deadweight loss from the tax.

Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?

	A.	The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases.
	B.	The price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases.
	C.	The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile does not change.
	D.	The price of chips in Chile increases to $19; the quantity of Chilean-produced chips decreases; and the quantity of chips imported by Chile decreases.

3)

n the market for widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. As a result, the government is able to raise $750 per month in tax revenue. We can conclude that the equilibrium quantity of widgets has fallen by..........(widgets) per month. Explain your calculation.

(Hint: draw a graph for you yourself to see the picture of the problem more clearly, graph not needed for answer submission )

Answer 1

öll with Increase in the tax, CLASSMATE loss Date there is increase in the deadweight fuam aria A ABE to AFGE Page As well as by looking decrease government revenue will at graph, because with increase in taxes, quantity will decrease t. Intersection pain of dunand & supply This option c) is correct answer. would price = $12 tariff +$7. Final Price price Because have to pay world price along with tariff Because of Increase in Quantity of Chilean produced Chips Increases (ive domestic production increases) because of tariff quantity of chips imported by Chile decreases whereas / Thus, option B is correct answer $5 S Б 150 200 Tax Revenue = $750 Tax Tax Revenue = Tax x Quantity 750 150 - Scanned by TapScanner