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Q: Question: i) Explain briefly what is demand? ii) What are the types of demand?
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If a tax is levied on the buyers of a product, the tax burden will fall entirely on the buyers.
A.) False
B.) True
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- 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?PA P3 $ P2 P₁ 0 ош A Di E 93 B 92 Quantity U 91 Demand Suppose that supply is perfectly elastic and the price of this good is initially in equilibrium at P1. If an excise tax raises the price from P1 to P2, the excess burden of the tax is area A) P3AP4. B) P1FBP2. _C) P1CBP2._____D) BFC. E) P2BP3.Graph B.5. shows the economics offects of a per-unit tax Refer to Graph B 5. to answer (38 following questions Graph B.5 P S P₁ D₂ D₁ Q Q₁ Q₂ Qs (a) is the tax levied on buyers or on sellers? (b) What is the price buyers pay after the tax is imposed? (c) What is the price the sellers receive after the tax is imposed? (d) What area represents government tax revenue after the tax is imposed? Ps ܘ ܘ ܘ ܘ ܘ P₂ B C F 11 J К H L M
- 1. What is the difference between Direct and Indirect tax? Short answerSuppose that the government imposes a tax on cigarettes. Use the diagram below to answer the questions. D is th demand curve before tax, S is the supply curve before tax and Sr is the supply curve after the tax. Price S- 18 12 10 V 8 7. ३ 10 12 QuaFigure 4-22 Price Market (a) Market (b) Pricel D Quantity Refer to Figure 4-22. In which market would the actual burden of a tax fall most heavily on the seller? Quantity Market (c) In none of the markets, as taxes only burden buyers Price Quantity
- 1. Consider a market where the supply is given by QS = P and the demand is given by QD=20-P. (a) Suppose the government wants to raise 18¥ by imposing per unit tax on this market. What tax rate will raise the required revenue and also mini- mize the dead weight loss? (b) What is the resulting equilibrium and the dead weight loss? What is the incidence of taxation? (c) Can you think of a method for raising 18Y from this market that will (1) incur no dead weight loss and (2) be preferable to the per unit tax for both the producers and the consumers.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.The govemment is considering imposing taxes onthe sellers of certain classes of products. The first tax they are considering is a tax on 2% milk. The second is a tax on all dairy products. The third is a tax on all food products. Which of these three taxes would you expect to have the largest impact on the sticker prices of the taxed products? Explain.
- 2.) Tax incidence is always highest for the side of the market that a.) Has the lowest legal tax obligation b.) Has the highest legal tax obligation c.) Has the highest price elasticity d.) Has the lowest price elasticity 3.) Suppose the government introduces a $2 per ice cream cone tax on producers in the market for ice cream. What will producer tax incidence be? a.) $0 b.) $1 c.) $2 d.) Not enough information 4.) Consumer surplus is equal to minus a.) Cost to produce, price b.) Price, cost to produce c.) Willingness to pay, price d.) Price, willingness to pay 5.) Producer surplus is equal to minus a.) Cost to produce, price b.) Price, cost to produce c.) Willingness to pay, price d.) Price, willingness to pay 6.) When price decreases, consumer surplus increases because: a.) the lower price allows new consumers to enter the market b.) consumers already in the market benefit from buying at a lower price c.) both a.) and b.) d.) neither a.) nor b.)Suppose that the Australian government imposes a sales tax on a product and both buyers and sellers share the burden of the If the price elasticity of demand for the product is perfectly inelastic. Which of the following is true? Select one: a. Sellers would pay more of the tax than buyers. b. Buyers would pay all of the tax. c. Buyers and sellers would share the tax burden equally. d. Sellers would pay all the tax.Price (dollars per textbook) 90 80 - 70 60 50 4 5 Quantity (millions of textbooks per year) 2 3 6 The graph shows the market for textbooks. If the government introduces a tax of $20 a textbook, then the price paid by buyers A) increases to $80 a textbook. B) is $70 a textbook. C) increases by $20. D) decreases to $60 a textbook.
