Homework Answers
According to the economic theory, consumers' bear the higher burden of tax, when the supply is more elastic than the demand. Therefore, in this case, the right answer is option B, that is, the unit tax is $1 on buyers and $2 on sellers, and the demand is less elastic than the supply.
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In which of the following cases will the tax burden be the largest on the consumers?...
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...
Assume that coal demand is elastic, while coal supply is highly inelastic. If a tax of...
Assume that coal demand is elastic, while coal supply is highly inelastic. If a tax of $5.00 per short ton is placed on coal buyers, we would expect that the burden of the tax would fall on Buyers and sellers equally. Buyers more than sellers Sellers more than buyers Not enough information to answer the question.
The economic burden of a tax is borne mostly by: buyers if demand is highly elastic....
The economic burden of a tax is borne mostly by: buyers if demand is highly elastic. O buyers if demand is highly ir plastic. buyers in all cases. sellers in all cases,
The graph below shows a hypothetical market for salt. Suppose that an excise or commodity tax...
The graph below shows a hypothetical market for salt. Suppose that an excise or commodity tax is levied on consumers in an attempt to curb blood pressure problems. Show the effect of the tax by shifting the appropriate curve(s). Who has the larger tax burden? Producers (suppliers) Consumers (buyers) The tax burdens are equal Why is the tax burden as you described in in the question above? Supply is less elastic than demand. Demand is more elastic than supply. Both...
If a $5 tax on each pack of cigarettes causes the market price of cigarettes to...
If a $5 tax on each pack of cigarettes causes the market price of cigarettes to increase by $2.50 then which of the following statements is true? consumers must be more elastic than producers consumers must be less elastic than producers consumers and producers must be equally elastic Question 42 (1 point) If the elasticity of demand is -1.8 and the elasticity of supply is 1, then consumers are than producers and the relative consumer burden will equal . Hint:...
f the supply is more elastic than the demand, ____________ will bear more subsidy benefit. If...
f the supply is more elastic than the demand, ____________ will bear more subsidy benefit. If the demand is more elastic than the supply, _________ will bear more tax burden. Sellers: Buyers Sellers: Sellers Buyers: Buyers Buyers: Sellers
Panel (a) Price Panel (b) Supply Supply Demand Demand 1 2 3 4 5 6 7 8 Quantity 1 2 3 4 5 6 7 8 Quantity 6. In which...
Panel (a) Price Panel (b) Supply Supply Demand Demand 1 2 3 4 5 6 7 8 Quantity 1 2 3 4 5 6 7 8 Quantity 6. In which of the panels in the figure do the buyers bear the greater tax incidence, and why is this? a) Panel(a), because the demand curve is relatively less elastic, meaning consumers are less willing to bear the burden of the tax. b) Panel (b), because the demand curve is relatively less...
The burden of the tax falls more heavily on the elastic side of the market. (less/more) 7....
The burden of the tax falls more heavily on the
elastic side of the market. (less/more)
7. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes. Suppose the government institutes a tax of $11.60 per pair. This places a wedge between the price buyers pay and the price sellers receive. 50 T 45 40 Supply 35 30 Tax Wedge 20 2 15 10 0 50 100 50 200 250 300 350 400 450...
6. Effect of a tax on buyers and sellers The following graph shows the daily market...
6. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes. Suppose the government institutes a tax of $11.60 per pair. This places a wedge between the price buyers pay and the price sellers receive. Supply Tax Wedge PRICE (Dollars per pair) Demand 0 100 200 800 900 1000 300 400 500 600 700 QUANTITY (Pairs of shoes) Fill in the following table with the quantity sold, the price buyers pay, and the...
Suppose the supply of a good is perfectly elastic while the demand is elastic. The burden...
Suppose the supply of a good is perfectly elastic while the demand is elastic. The burden of a tax on the drug will A) be shared by the buyers and sellers. B) fall entirely on the sellers. C) fall entirely on the buyers D) fall on neither the buyers nor the sellers.
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...
The economic burden of a tax is borne mostly by: buyers if demand is highly elastic. O buyers if demand is highly ir plastic. buyers in all cases. sellers in all cases,
The graph below shows a hypothetical market for salt. Suppose that an excise or commodity tax is levied on consumers in an attempt to curb blood pressure problems. Show the effect of the tax by shifting the appropriate curve(s). Who has the larger tax burden? Producers (suppliers) Consumers (buyers) The tax burdens are equal Why is the tax burden as you described in in the question above? Supply is less elastic than demand. Demand is more elastic than supply. Both...
If a $5 tax on each pack of cigarettes causes the market price of cigarettes to increase by $2.50 then which of the following statements is true? consumers must be more elastic than producers consumers must be less elastic than producers consumers and producers must be equally elastic Question 42 (1 point) If the elasticity of demand is -1.8 and the elasticity of supply is 1, then consumers are than producers and the relative consumer burden will equal . Hint:...
Panel (a) Price Panel (b) Supply Supply Demand Demand 1 2 3 4 5 6 7 8 Quantity 1 2 3 4 5 6 7 8 Quantity 6. In which of the panels in the figure do the buyers bear the greater tax incidence, and why is this? a) Panel(a), because the demand curve is relatively less elastic, meaning consumers are less willing to bear the burden of the tax. b) Panel (b), because the demand curve is relatively less...
The burden of the tax falls more heavily on the
elastic side of the market. (less/more)
7. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes. Suppose the government institutes a tax of $11.60 per pair. This places a wedge between the price buyers pay and the price sellers receive. 50 T 45 40 Supply 35 30 Tax Wedge 20 2 15 10 0 50 100 50 200 250 300 350 400 450...
6. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes. Suppose the government institutes a tax of $11.60 per pair. This places a wedge between the price buyers pay and the price sellers receive. Supply Tax Wedge PRICE (Dollars per pair) Demand 0 100 200 800 900 1000 300 400 500 600 700 QUANTITY (Pairs of shoes) Fill in the following table with the quantity sold, the price buyers pay, and the...
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