The demand for beer is more elastic than the demand for milk, so a tax on beer would have a smaller deadweight loss than an equivalent tax on milk, all else equal.
Ans) the above statement is false
The demand for beer is more elastic so a percentage change in price will lead to a larger percentage change in quantity demanded. There will be larger deadweight loss. Whereas the demand for milk is a necessity good so it has a less elastic demand meaning milk will have a smaller deadweight loss. The deadweight loss of a tax is larger the greater is the elasticity of demand
The demand for beer is more elastic than the demand for milk, so a tax on...
In the long run, both supply and demand tend to become more elastic. This suggests that, in the long run, the deadweight loss from a tax will be less than it is in the short run. deadweight loss will be zero. government will likely reduce tax rates. tax revenue will be lower than it is in the short run. tax revenue will be higher than it is in the short run.
All else equal, consumer demand for a good will be more elastic in the short run than in the long run. True False D Question 4 10 pts Food and drink purchased inside an airport or concert have higher prices than food and drink elsewhere because when consumers are in these locations demand is more (elastic, inelastic). When this is the case. sellers can earn more revenue by charging (higher, lower) prices. The reason that prices in these locations aren't...
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
Suppose that the demand for apples is perfectly elastic and the government levies a tax on the producers of apples. Assume that the supply of apples is neither perfectly elastic nor perfectly inelastic. 1. How will the price paid by consumers change? Is this change bigger or smaller than the price change that would result if the demand for apples were not perfectly elastic? 2. How will the quantity of apples consumed change because of the tax? Is this change...
9. Draw a tax on soda, assuming relatively elastic demand for soda. Label all the relevant axes, curves, prices (all of them), and quanti- ties as well as the consumer surplus, producer surplus, tax revenue and deadweight loss. Soda 10. Based on your graph, would this tax very effective at reducing the consumption of soda? 11. Suppose this tax is levied on suppliers, meaning they are re- sponsible for paying the government a certain amount for every soda they sell....
Demand is more elastic: a. in the short run than in the long run. b. for goods with many substitutes than for goods with only a few. c. for goods with no substitutes. d. for necessities than for luxuries. e. for broadly defined goods than for narrowly defined ones. All other things constant, if a _____ proportion of a consumer’s budget is spent on a good, the demand for the good will be more _____ and a consumer will purchase...
Draw a graph with two demand curves – one that is fairly elastic (labeled De) and one that is fairly inelastic (labeled Di). Draw a supply curve and label it S. Suppose this market sees an increase in the price of this good due to the imposition of a tax. Draw the new supply curve and label it S2. Compare the impact in the market of the shift in supply between the elastic demand curve and the inelastic demand curve....
rice P4 Supply H D F G Demand Quantity 02 29. Refer to Figure 7-23 The figure depicts a market equilibrium where there is a tax on the good transacted. The deadweight loss as a result of the tax is represented by the area of a. A+B+D+F. b. C+H. c. B+D d. G+I Figure 8-16 Price Panel (b) Price Pasel (a) Sepply Dand Dand 1 2 34 5 67 Deantity 4 567 Denti- 1 2 30. Refer to Figure 8-16....
A) Is the demand for Dell computers to be more or less price-elastic than the demand for all Computers? Explain B) Compare the demand curve of Dell computers and the demand curve for all computers, which one is steeper?
Taxing goods with relatively inelastic demand will result in more "deadweight" efficiency loss per dollar of tax revenue than taxing goods with relatively elastic demand. True False