Question 5Suppose that the government imposes a tax on cigarettes. Use the diagram below to answer the questions. Dis the demand curve before tax, S is the supply curve before tax and ST is the supply curve after the tax.Price1210 -Qua(a) For the market for cioarettes without the tax, Indicate:(0)Price paid by consumersPrice paid by producersQuantity of cigarettes soldBuyer's reservation priceSellers reservation price

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Answered: Question 5 Suppose that the government…

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 7PA

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Under which circumstances does line tax burden fall entirely on consumers?
1. Assume that the demand for cigarettes is Qd=1600-30P and the supply of cigarettes is Qs=1400+70P: a. Calculate the equilibrium price and quantity and show them on a supplyand demand diagram. b. Suppose the government levies a $2 tax for each unit of cigarettes sold.Draw this on the diagram and calculate the new equilibrium price andquantity. c. Calculate the price elasticity of demand given these two price andquantity points. Is the demand for cigarettes price elastic or inelastic onthis part of the demand curve? Interpret the elasticity in words (i.e. If theprices rises by 10%, by what percentage will consumption fall?) d. On a graph, identify the tax revenue generated by this tax. e. Indicate each area on the graph with a letter and show in a table theconsumer surplus and the producer surplus before and after the tax. Also,indicate the deadweight loss associated with this tax. f. If your policy advisor boss wanted you to provide him/her witharguments in favor of this cigarette…
Suppose that the government imposes a tax on eigarettes. Use the diagram below to answer the questions. Dis the demand curve before tax, S is the supply curve before tax and Sis the supply curve after the tax Price 18 12 10 10 12 Qua (a) For the market for cigarettes without the tax indicate: (0) Price paid by consumers (8) Price paid by producers () Quantity of cigarettes sold (w) Buyer's reservation price
7.04 Review Suppose a tax of $20 is placed on televisions. If this market's supply and demand curves' are elastic, the burden of this tax falls on: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the sellers b the buyers both the sellers and the buyers.
need help with question 2 (a) Draw the demand and supply curves from the data in Table 1. (b) What is the equilibrium quantity demanded and supplied? The government now imposes a specinc tax of £3 per unit. (c) Show the effect of this on the diogram (d) Whot is the new equilibrium quantity demanded and supplied? (e) What is the new equilibrium price?' (f What is the incidence of tax per unit on i) the consumer and (i) the producer? (g) What is (1) the tax per unit and (i) total government revenue from the tox? (h) By how much will the before tox revenue or producers changer
3. The diagram below shows the effect of a tax as measured by the "wedge" J-K: Price 100 90 80 70 60 50+ 40- K 30 20 D 10 40 60 80 100 120 140 160 180 200 Quantity 20
1. Discuss the impact of the imposition of a tax (on the seller). What happens to the following? Price paid by the buyer Price received by the seller Quantity of the good sold Consumer surplus Producer surplus Total surplus 2. Is the impact different if the tax is placed on the buyer? 3. How does elasticity impact the incidence of a tax?
1. Please explain what would happen to the market-clearing prices and quantities of e- cigarettes in the U.S. under the following hypothetical scenarios. b. The federal government imposed a $1 per pack excise tax on cigarettes.
10) The following graph shows the effect of a per-ticket tax on plane tickets from Boston to Tampa. Use the graph to answer questions 5 to 10. oo Price (P) of airline tickets (in dollars per ticket) $150 thousand $3,000 thousand $6,000 thousand $1,114 thousand 230 What is the deadweight loss due to the tax? 200 190 2850 3000 Swith tax Sno tax D Figure 14 Image author created Quantity (Q) of airline tickets (thousands per day)
7. Effect of a tax on buyers and sellers The following graph shows the daily market for jeans. Suppose the govermment institutes a tax of $23.20 per pair. This plae price buyers pay and the price sellers recelve. 100 90 Supply Tax Wedge 50 40 30 20 10 Demand 10 20 40 50 60 70 100 QUANTITY (Pairs of jeans) R8S PRICE (Dollars per pair)
ut Figure 6-13 Price F1 Price 191-4 on this page 2 W F2 # (a) 3 (c) E 80 fer to Figure 6-13. In which market will the maiority of a tax be paid by the buyer? F3 Quantity $ 4 Quantity R Price F4 Price 5 0 F5 (b) (d) 6 D F6 Quantity D Quantity & 7 F7 8 DII F8

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