Suppose the government imposes a $10-per-case tax on suppliers.At this tax amount, the equilibrium quantity of wine isNow calculate the government's tax revenue if it sets a tax of $0, $10, $20, $25, $30, $40, or $50 per case. (Hint: To find the equilibrium quantityafter the tax, adjust the "Quantity" field until the Tax equals the value of the per-unit tax.) Using the data you generate, plot a Laffer curve by usingthe green points (triangle symbol) to plot total tax revenue at each of those tax levels.TAX REVENUE (Dollars)Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.720648576504432360288216144720H05O True1015 20 25 30TAX (Dollars per case)O False3540cases, and the government collects $4550Suppose the government is currently imposing a $5-per-case tax on wine.Laffer CurveTrue or False: The government can raise its tax revenue by increasing the per-unit tax on wine.in tax revenue. Government-imposed taxes cause reductions in the activity that is being taxed, which has important implications for revenue collections.To understand the effect of such a tax, consider the monthly market for wine, which is shown on the following graph.Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.PRICE (Dollars per case)504540353025201510501SupplyDemand09 18 27 36 45 54 63 72 81 90QUANTITY (Cases)Graph Input ToolSuppose the government imposes a $10-per-case tax on suppliers.At this tax amount, the equilibrium quantity of wine isMarket for WineQuantity(Cases)Demand Price(Dollars per case)Tax(Dollars per case)3630.0010.00Supply Price(Dollars per case)cases, and the government collects $?20.00in tax revenue.

The Laffer curve illustrates the tax revenue at each possible level of tax rate. So, the Laffer…

Answered: Suppose the government imposes a…

Suppose the government imposes a $10-per-case tax on suppliers. At this tax amount, the equilibrium quantity of wine is cases, and the government collects $ in tax revenue.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

ChapterA: Working With Diagrams

Section: Chapter Questions

Problem 2QP

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