A higher tax rate is more likely to increase tax revenue if the price elasticity of...
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 are the consumers.
c. the government will receive less tax revenue than anticipated.
d. consumers are paying more of the tax than the producers.
Homework Answers
The ability of the government to raise tax revenue depends upon the relative elasticity of demand and supply. If the elasticity of demand and supply is low, the quantity demand and quantity supply does not decrease with a price increase due to the imposition of a tax. Thus the equilibrium quantity does not decrease with price increase.
Answer:b. low; low.
If the price increases to the full extent of the tax amount, it means that the producers fully shift their tax burden upon the consumers. It the price increase is less than the full amount of tax, the inference is that the producers shared a part of the tax burden. The government imposed an excise tax equal to $5, but the price increased by $2. Here the producers are paying more of the tax than the consumers.
Answer: b. producers are paying more of the tax than consumers.
Add Answer to:
A higher tax rate is more likely to increase tax revenue if the
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1) Suppose supply is given by:10+2Q, and demand is given by: P-120-3Qs A) Find equilibrium price...
1) Suppose supply is given by:10+2Q, and demand is given by: P-120-3Qs A) Find equilibrium price and quantity B) What are the demand and supply elasticities at equilibrium? C) Neaxt, suppose the government imposes an excise tax of $10 per unit. What is the price that consumers pay, the price that selers receive after paying the tax, and the tax revenue? D) Show the portion of the tax that is borne by consumers and what portion is borne by producers...
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16. If price elasticity of demand for good X is 2 and the price elasticity of supply for good X is 3; if an excise tax of $40 levied on good x, consumers will end up paying _______ and producers paying __________. $15; $25 $16; $24 $25; $15 $24; $16
If a $5 tax on each pack of cigarettes causes the market price of cigarettes to...
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Suppose the government applies a specific tax to a good where the demand elasticity, e, is-04,...
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I really just need assistance w/the multiple choices. I think: "The subsidy will cost the government more than the net...
I really just need assistance w/the multiple choices. I
think:
"The subsidy will cost the government more than the net benefit
to consumers and producers" is correct as well as
"Both consumers and producers will be better off"
Suppose that the government gives a $10 per unit subsidy to sellers of Humbugs. The pre-tax price of Humbugs was $50. There are no additional social benefits to encouraging the consumption of Humbugs. If, at the original equilibrium price, the elasticity of...
In an effort to raise revenue without hurting lower income persons, Congress imposed an excise tax...
In an effort to raise revenue without hurting lower income
persons, Congress imposed an excise tax on luxury goods (viz.,
expensive cars, large yachts, furs, personal aircraft) manufactured
in the U.S. The excise tax imposed is represented on the diagram
below as Stax . The revenue government
anticipated it yielding is represented by the rectangle
P1abc (which is the tax per unit, distance ab, times
quantity Q1). The tax, however, did not work as
intended. After awhile domestic producers of...
In some markets, certain products are sold. Price elasticity of supply exceeds demand elasticity (price elasticity...
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1) Suppose supply is given by:10+2Q, and demand is given by: P-120-3Qs A) Find equilibrium price and quantity B) What are the demand and supply elasticities at equilibrium? C) Neaxt, suppose the government imposes an excise tax of $10 per unit. What is the price that consumers pay, the price that selers receive after paying the tax, and the tax revenue? D) Show the portion of the tax that is borne by consumers and what portion is borne by producers...
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Suppose the government applies a specific tax to a good where the demand elasticity, e, is-04, and the supply elasticity, η·is 0.8. If a specific tax, τ, of $1.25 were placed on the good, what is the price increase that consumers would pay? The price paid by consumers would increase by s(Enter your response rounded to the nearest penny) The amount producers receive would decrease by s(Enter your response rounded to the nearest penny) The tax incidence on consumers is
I really just need assistance w/the multiple choices. I
think:
"The subsidy will cost the government more than the net benefit
to consumers and producers" is correct as well as
"Both consumers and producers will be better off"
Suppose that the government gives a $10 per unit subsidy to sellers of Humbugs. The pre-tax price of Humbugs was $50. There are no additional social benefits to encouraging the consumption of Humbugs. If, at the original equilibrium price, the elasticity of...
In an effort to raise revenue without hurting lower income
persons, Congress imposed an excise tax on luxury goods (viz.,
expensive cars, large yachts, furs, personal aircraft) manufactured
in the U.S. The excise tax imposed is represented on the diagram
below as Stax . The revenue government
anticipated it yielding is represented by the rectangle
P1abc (which is the tax per unit, distance ab, times
quantity Q1). The tax, however, did not work as
intended. After awhile domestic producers of...
In some markets, certain products are sold. Price elasticity of supply exceeds demand elasticity (price elasticity of demand). Now, value added tax is added to the product. Which of the following is correct? Choose one: a. Manufacturers and consumers bear the same amount of tax. b. Consumers fully pay the tax. c. Consumers carry more of the tax than manufacturers. d. Manufacturers carry more of the tax than consumers. e. Manufacturers pay the tax in full.
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