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- After the excise tax is imposed, what is the new equilibrium quantity of sofas? d. What is the total amount of revenue collected by the government from the excise tax on sofas?Consider the supply and demand functions graphed below. Р Demand Supply 20 50 80 100 Download the figure. Suppose a demand-side tax is imposed. As a result of the tax, the new equilibrium quantity is 50. What is the price paid by consumers? What is the price paid by producers? How much is the tax that was imposed? How much tax revenue is collected? Which side of the market pays more of the tax? This side of the market pays more of the tax because 10 LO 21 GA GAHow does tax affect AE line? Draw graphs to explain
- 9. Effect of a tax on buyers and sellers The following graph shows the daily market for wine when the tax on sellers is set at $0 per bottle. Suppose the government institutes a tax of $40.60 per bottle, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then, enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) 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. 200 PRICE (Dollars per bottle) 160 Supply 140 120 100 14 80 Demand 60 40 20 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Bottles of wine) 180 0 Before Tax After Tax Graph Input Tool…6. Changes in taxes The following graph plots an aggregate demand curve. Using the graph, shift the aggregate demand curve to depict the impact that a tax hike has on the economy. ? PRICE LEVEL 8 1:30 120 110 100 8 90 80 70 0 Sunnore the no 10 20 30 OUTPUT Aggregate Demand 40 50 Aggregate Demand12. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes when the tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $11.60 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per pair) 100 90 80 70 60 50 40 30 20 10 0 Demand Before Tax After Tax 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) Buyers Sellers Supply Tax…
- Refer to the interactive below: Tax Burden II. GRAPH O SETTINGS Tax Burden Off Reset ($) Price Tax imposed on: Supply Demand 90 $90.00 Excise Tax (0 - $20) 0.00 80 70 Demand 60 Perfectly Relatively Inelastic Elastic Relatively Elastic 50 $50.00 40 Supply Less Perfectly 30 Elastic Elastic Perfectly Elastic 20 D 10 CALCULATIONS 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 Quantity (thousands per week) Price Paid Quantity No Tax $50.00 4,000 With Tax $50.00 Instructions: Adjust the sliders so that the vertical intercept of the supply curve is $20 and the demand curve is perfectly inelastic. Click the Tax Burden switch above the graph to On. Make additional modifications to the interactive tool as indicated to answer the following questions. a) If there is no tax, the equilibrium price is $50. If a $15 tax paid on sellers is implemented, the buyer will pay $ burden of the tax (Click to select) and the b) Suppose the supply curve gradually changed to become more elastic with the original equilibrium…The government intends to impose taxes on alcohol. Its demand has a fixed elasticity -1 and the supply is perfectly elastic. If six million bottles are seldom worth $ 10, how much tax revenue could the government earn by taxing $ 2 per bottle? Tax revenue will be approximately: Plz do fast asap3. Effect of a tax on buyers and sellers The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $40.60 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars par bag) 103 Demand Supply 143 120 100 GO 40 20 50 Tax Wedge 100 150 200 250 300 350 400 450 500 QUANTITY (Bags of handbags) ? Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity (Bags of handbags) Price Buyers Pay (Dollars per bag) Price Sellers Receive (Dollars per bag) Before Tax After Tax Using your answers from the previous table, calculate the tax burden that fals on buyers and on selers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Tax Burden Buyers Sellers (Dollars per bag) Elasticity The…
- Figure 8-24. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. Tax Revenue F 765YMN1 Refer to Figure 8-24. For an economy that is currently at point D on the curve, a decrease in the tax rate would a decrease consumer surplus. b. decrease producer surplus. c. increase tax revenue. d. increase the deadweight loss of the tax. Tax SizeEach state imposes its own excise tax on gasoline. Suppose, for example, that the state of Massachusetts imposes a state gasoline tax of $0.26 per gallon. Suppose further that an average of 1,022,000 gallons of gasoline per day were sold in Massachusetts in 2010. a. Massachusetts' total revenue from the gasoline tax in 2010 was approximately $111 million $86 million $97 million $232 million9. Effect of a tax on buyers and sellers The following graph shows the dally market for jeans when the tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $40.60 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then, enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) 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. Graph Input Tool 200 Market for Jeans 180 IQuantity Pairs of jeans) Demand Price (Dellars per pair) 60 160 Susply Supply Price (Dolars per pair) 140 132.00 0.00 120 100 Supply Shifter…
