Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506893
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Textbook Question
Chapter 4, Problem 11CQ
What is the nature of the
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Consider the market below where the government has imposed a $12 excise tax on this
product.
P
$33
$24
$18
$15
$12
$3
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B
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F
QE₁
18
с
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Siafter tax
So before tax
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Q
QE₂
QE。
30
42
What area on the graph represents the total amount of DEADWEIGHT LOSS that results from
the imposition of the tax?
Due to imposing a sugar tax, who would likely suffer a greater share of the deadweight loss – the consumer or producer? Explain.
if deadweight loss is $24,000 under a tax of $4 per unit, what is deadweight loss under a tax of $2 per unit?
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Microeconomics: Private and Public Choice (MindTap Course List)
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- The annual demand for imported oranges is given by the following equation:QD = 600,000 − 30,000Pwhere P is the price per kilogram and QD is quantity of kilograms demanded per year.The supply of imported oranges is given by the equation:QS = 20,000P Calculate the following: i. the excess burden of the taxarrow_forwardBased on your knowledge of the price elasticity of demand, do you think the deadweight loss of a soda/junk-food tax would be relatively large or relatively small?arrow_forwardThe market demand for super-sticky glue is Q = 340 - 6P and the market supply is Q= 340 + 2P. a. Calculate the deadweight loss of a tax of GHS4 levied on producers of super-sticky glue. per unit b. How does deadweight ioss change if the tax is levied on consumers of super-sticky glue?arrow_forward
- What happens to the deadweight loss and taxrevenue when a tax is increased?arrow_forwardExplain why the imposition of the price ceiling does not result in a deadweight loss.arrow_forwardDiscuss how elasticity of demand can impact the size of the deadweight loss in a market subject to taxationarrow_forward
- Suppose demand for good X is given by QD = 900- p/2 where p is the price and QD the quantity demanded. Supply is given by QS = p/4.Suppose 60 TL tax is imposed on each unit of X that is purchased.What is the burden of the tax? Explain the key factors that determine the incidence of the tax.arrow_forwardiven the following information QD = 240-5P QS= P Where QD is the quantity demanded, Qs is the quantity supplied and P is the price. Suppose the government decides to impose a tax of $12 per unit on sellers in this market. Determine the deadweight loss of the taxarrow_forwardSuppose there is only one movie theatre in a town and the equilibrium price and quantity for movie admissions is 7 TL and 940 visits per week. Now suppose the government imposes a tax of 3 TL per movie admission, and the new equilibrium price and quantity are 8.75 TL and 750 visits per week. What is the total burden of this tax?arrow_forward
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