government increase VAT on some commodities in order to raise revenue the market for X was at equilibrium before tax at price 50 per unit sold and quantity was 5000 units suppose own price elasticity of demand is 0.6 and the elasticity of supply is 1.1after the government announced tax measures the new market price increased to ksh 70 per unit calculate the seller and buyers burden

government increase VAT on some commodities in order to raise revenue the market for X was at equilibrium before tax at price 50 per unit sold and quantity was 5000 units suppose own price elasticity of demand is 0.6 and the elasticity of supply is 1.1after the government announced tax measures the new market price increased to ksh 70 per unit calculate the seller and buyers burden

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter6: Demand And Elasticity

Section: Chapter Questions

Problem 3TY

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The market for commodity Z was at equilibrim before tax at price Ksh. 50 per unit sold and the quantity was 5000 units. Suppose own price elasticity of demand is 0.6 and the elasticity of supply is 1.1 After the government announced tax measures the new market price increased to Ksh. 70 per unit. Calculate the equilibrium price and quntity after tax Calculate the seller and buyers burden, Explain
No written by hand solution How is supply and demand and elasticity related to Revenues?
GRAPH ($) Price 90 $90.00 80 70 60 50 $50.00 40 30 20 10 Surplus Measures off SETTINGS S Tax imposed on: Supply Demand Excise Tax (0-$20) Demand Perfectly Inelastic Supply 0.00 Reset Relatively Elastic Relatively Elastic Elastic Perfectly Elastic Perfectly stic D CALCULATIONS 0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 19.0 Quantity (thousands per week) Price Paid Quantity No Tax $50.00 4,000 With Tax $50.00 4,000
Follow up question regarding elasticities and taxes.
With a tax of Rs4/unit,the price of the good rises from Rs5/unit to Rs9/unit. Which of the following statements is true a. Price elasticity of demand is equal to price elasticity of supply b. Demand for the product is perfectly elastic c. Price elasticity of demand is equal to infinity d. Demand for the product is perfectly inelastic
A sales tax is imposed on good A. The supply of good A is not perfectly elastic or perfectly inelastic. Suppose that the demand for good A becomes more inelastic. (a) Will the tax burden on sellers increase or decrease? (b) Will the DWL increase or decrease?
The reason which determines the elasticity of tax burden on buyers and sellers.
Explains it correctly Q)Elasticity of demand and supply is both 1.23. Will the consumers pay more tax or not?
The elasticity of demand for apples is estimated to be-1.75, If the price of apples falls by 10%, how large do we expect the quantity of apples demanded to rise? A-10% B-175% C. 17.3% D. 35% OA OB OC OD
The company recently changed the selling price of one of its products from ₱50.00 to ₱45.00. The unit sales changed from 2,000 to 2,350. Tax rate is 30%. The product's price elasticity of demand is closest to: a. -0.16 b. -2.12 c. 1.53 d. -1.53 e. -1.97 f. -1.07
ces II. GRAPH ($) Price 90 $90.00 80 70 60 50 40 30 20 10 0 150.00 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Tax Burden S 8.0 9.0 off Quantity (thousands per week) SETTINGS Tax imposed on: Supply Excise Tax (0-$20) Demand Perfectly Inelastic Supply Lew Elastic CALCULATIONS No Tax With Tax Perfectly fiestic Demand Price Paid $50.00 $50.00 0.00 Relatively Perfectly Elastic Quantity 4,000 4,000
The table provides information for the quantity demanded of a product at different income levels. Calculate Income elasticity of demand. Interpret the results. Yearly Income Quantity demanded, units /year 30000 1200 36000 1100