Question

The government of Dreamland wants to raise a revenue of $1 billion annually by imposing a...

The government of Dreamland wants to raise a revenue of $1 billion annually by imposing a commodity tax on three goods: anvils, books, and cardigans. The elasticities of demand for anvils, books, and cardigans are -3, -1.5, and -1.2, respectively. What good should the government put the highest and the lowest tax on if it wants to minimize excess burden? Explain.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The government of Bassaland is looking for new revenue sources. It is considering imposing an excise...
The government of Bassaland is looking for new revenue sources. It is considering imposing an excise tax on two goods: palm wine and diapers. If the price elasticity of demand for the goods are -0.47 and -1.89 respectively, which good should it tax if the goal is to raise revenue? Explain your answer. If the government wants to tax only one good, which good should it tax if the goal is to discourage consumption? Explain your answer.
The government of Bassaland is looking for new revenue sources. It is considering imposing an excise...
The government of Bassaland is looking for new revenue sources. It is considering imposing an excise tax on two goods: palm wine and diapers. If the price elasticity of demand for the goods are -0.47 and -1.89 respectively, which good should it tax if the goal is to raise revenue? If the government wants to tax only one good, which good should it tax if the goal is to discourage consumption? 50 words minimum.
b- Suppose that the government wants to maximize tax revenue. Explain why it may be not...
b- Suppose that the government wants to maximize tax revenue. Explain why it may be not a good idea for the government to raise tax rates for a good with a price elasticity of demand more than one. Explanation with diagram
If a policy maker wants to raise tax revenue while minimizing the deadweight loss, he should...
If a policy maker wants to raise tax revenue while minimizing the deadweight loss, he should look for goods with ……………..elasticities of demand and …………………elasticities of supply. A. small, small B. small, large C. large, small D. large, large
The government has increased Vat on some commodities in order to raise revenue. The market for...
The government has increased Vat on some commodities in order to raise revenue. The market for commodity x was at equilibrium before tax at shillings 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 price increased to shillings 70 per unit. Calculate the equilibrium price and quantities after tax.
Suppose the government of Kurtzmantonia is considering imposing a tax of $1 per room per night...
Suppose the government of Kurtzmantonia is considering imposing a tax of $1 per room per night on bed-and-breakfasts (B&B’s). Currently, the demand and supply for rooms in B&B’s are as follows: Demand: ??=13∙(100 – ??) Supply: ??= 20 + ?? where ?? and ?? are respectively the quantity of rooms demanded and supplied (measured in rooms/night), ??is the price (in $ per room-night) paid by consumers, and ?? is the price collected by sellers. a. Find the market equilibrium price...
1) True/False and Explain: The government presumably prefers to raise revenues in a way that creates...
1) True/False and Explain: The government presumably prefers to raise revenues in a way that creates the lowest possible deadweight loss to society. If so, the government should prefer to tax heavily those items with inelastic demands. 2) If you’re taking a test that has several questions, how should you allocate your time among the questions in order to get the highest score? (Note that which you want to maximize is your exam grade and the constraint is the amount...
1. Imagine that you work for the central bureaucracy and you need to raise revenue. You...
1. Imagine that you work for the central bureaucracy and you need to raise revenue. You want to use a per-unit tax on some good. There are two possible goods. The current equilibrium price and quantity are the same for both goods. However, for good A, both the supply and demand are more elastic than for good B. The tax will be $1/unit regardless of which good you choose to tax. Which good will give you more revenue? Which one...
1.Taxes can be justified if the government uses the revenue to (i) provide public goods such...
1.Taxes can be justified if the government uses the revenue to (i) provide public goods such as national defense. (ii) clean up negative externalities such as water pollution. (iii) regulate a common resource such as fish in a public lake. (iv) provide goods with positive externalities such as medical research. A) (ii) only B) (ii) and (iii) only C) (i), (ii), and (iii) only D) (i), (ii), (iii), and (iv) 2.A person's tax liability refers to A) the percentage of...
1. Between 2007 and 2008 investment declined from an annual rate of $2160 billion to $1930...
1. Between 2007 and 2008 investment declined from an annual rate of $2160 billion to $1930 billion as the U.S. economy found itself in yet another recession. As a result of the recession, the unemployment rate grew to 9.3 % by 2009.  Assume MPC= .75 a) How did the decline in investment between 2007 and 2008 affect Aggregate Demand (AD)?  Show or explain your work.    (5 pts) b) Assume the AD shortfall in 2009 was $1240 billion. As an economic adviser to...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT