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 demand for beer and cigarettes are price inelastic i.e. even if the price of these goods increased the demand will not fall considerably allowing the government to charge a tax and benefit from it. If the government is charging a tax in mangoes and minerla water that have an elastic demand it will result in fall of the demand and reduced goods traded will reduce the revenue as well.
From a revenue-maximizing viewpoint, explain why the government would be more likely to impose excise taxes...
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
Hi please assist with the following questions regarding excise taxes, Assume that the government has imposed a tax on the production and sale of pickup trucks in America. In what cases would that tax be absorbed more by consumers than manufacturers and vice versa? Under what circumstances would you expect the total excise tax to be borne by a consumer rather than by the producer? Or by the producer? Assume that the government imposed a 100% luxury tax on new...
3. All states impose excise taxes on gasoline. According to data from the Federal Highway Administration, the state of California imposes an excise tax of $0.40 per gallon of gasoline. In 2015, gasoline sales in California totaled 14.6 billion gallons. What was California’s tax revenue from the gasoline excise tax?
1.Governments often claim that they impose high taxes on cigarettes because smoking is bad for your health. They claim that the high taxes are intended to discourage your consumption. Use your understanding of the elasticity of demand to dispute this claim, assuming that cigarettes have a very inelastic demand. Illustrate with a graph. Hint: Very inelastic is not the same as inelastic or perfectly inelastic. 2.Supposing that Canada and China were the only two countries in the world, why would...
1.Governments often claim that they impose high taxes on cigarettes because smoking is bad for your health. They claim that the high taxes are intended to discourage your consumption. Use your understanding of the elasticity of demand to dispute this claim, assuming that cigarettes have a very inelastic demand. Illustrate with a graph. Hint: Very inelastic is not the same as inelastic or perfectly inelastic. 2.Supposing that Canada and China were the only two countries in the world, why would...
A higher tax rate is more likely to increase tax revenue if the price elasticity of demand is _____ and the price elasticity of supply is _____. Select one: a. low; high b. low; low c. high; low d. high; high If the government imposes a $5 excise tax on leather shoes and the price of leather shoes increases by $2: Select one: a. the quantity of shoes sold will increase. b. producers are paying more of the tax than...
a) The government is contemplating introducing one of two alternative taxes: a tax on commodity x (that would double the price of x, expressed in terms of the numeraire good, y) and a lump-sum tax. Assume that the government knows the preferences (i.e., the indifference map) of a representative taxpayer and his/her indifference curves have the usual convex shape. Suppose that government could predict how much tax revenue it could raise if it introduced the commodity tax. With the aid...
Use the Law of Demand to explain why all consumers must receive a surplus whenever they purchase more than one unit of a product but may receive no surplus if only one unit is bought. Make up a numerical example to illustrate. Provide two reasons why consumer surplus must increase when the price of a product falls? Explain fully why taxing a product leads to deadweight loss. Use appropriate graphs to explain why the deadweight loss is greater the more...
Microeconomics Book, thirteen edition, Parkin Unit 6 : GOVERNMENT ACTIONS IN MARKETS --------------------------------------------------------------------------------- TAXES : Governor's Proposed "Sin Taxes" Won't Be Enough Kansas Governor Sam Brownback proposes to raise tobacco taxes from 10 to 20 percent and liquor taxes from 8 to 16 percent. "I hope it doesn't happen," said Patti Hoffman of Patti's Wine and Spirits. " I think it's going to affect the consumer more than it will me." State Rep. Russ Jennings is concerned that people in...