Question

Suppose the government wants to punish a steel plants for polluting the air. Should the government...

Suppose the government wants to punish a steel plants for polluting the air. Should the government levy a tax on the consumers or producers? Explain.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

If government wants to impose tax due to pollution in the air, it will be imposed on consumers as well as producers based on their elasticity no matter on whom it is imposed. If elasticity of supply < elasticity of demand, producers will bear more of the tax and vice versa.

As pollution is caused by firm owner, government must impose tax on them. If there are plents of suppliers available in the market such that consumers do not have inelastic demand from a supplier where inelastic demand means that consumers will be ready to bear more of the tax burden but not ready to reduce quantity demanded, government should impose tax on producer which will reduce the price receive because consumer will shift to any other supplier.

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
Part One: By the government proposing a 45% trariff on imported steel, what should the u.s....
Part One: By the government proposing a 45% trariff on imported steel, what should the u.s. steel producers do to make this barrier beneficial to more people? Part Two: If the government does not propose a 45% trariff on imported steel, what should the u.s. government do to reduce the negative impacts of free trade?
Suppose that a steel factory emits a certain amount of air pollution, which constitutes a negative...
Suppose that a steel factory emits a certain amount of air pollution, which constitutes a negative externality. If the market does not internalize the externality, Select one: a. the supply curve would adequately reflect the marginal social cost of production. b. consumers will be required to pay a higher price for steel than they would have if the externality were internalized. c. the market equilibrium quantity will not be the socially optimal quantity. d. producers will produce less steel than...
Consider a market for homogeneous medicinal plants produced in a constant cost-competitive industry. Suppose that a...
Consider a market for homogeneous medicinal plants produced in a constant cost-competitive industry. Suppose that a $10 per unit tax is imposed on medicinal herbs and that the government collects the tax from the medicinal plant farms (producers). This is a more conceptual based question rather than calculation based. a. How will that tax be shared between consumers and producers in the short run? b. How will that tax be shared between consumers and producers in the long run? c....
Consider two polluting firms. The marginal cost of abatement for firm 1 is MC1 = e1...
Consider two polluting firms. The marginal cost of abatement for firm 1 is MC1 = e1 + 300, and the marginal cost of abatement for firm 2 is MC2 = 3e2, where e1 and e2 are the tons of pollution abatement by firms 1 and 2, respectively. Baseline pollution levels are bl1 = 2000 and bl2 = 2000. Suppose the government sets a pollution reduction goal of 1600 total units of abatement. Write down two equations that ensure that the...
Suppose that the U.S. government decides to charge beer consumers a tax. Before the tax, 25,000...
Suppose that the U.S. government decides to charge beer consumers a tax. Before the tax, 25,000 cases of beer were sold every week at a price of $4 per case. After the tax, 19,000 cases of beer are sold every week; consumers pay $5 per case (including the tax), and producers receive $1 per case. The amount of the tax on a case of beer is $_______ per case. Of this amount, the burden that falls on consumers is $____...
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
Suppose that the U.S. government decides to charge wine producers a tax. Before the tax, 30,000...
Suppose that the U.S. government decides to charge wine producers a tax. Before the tax, 30,000 bottles of wine were sold every week at a price of $7 per bottle. After the tax, 25,000 bottles of wine are sold every week; consumers pay $9 per bottle, and producers receive $6 per bottle (after paying the tax). The amount of the tax on a bottle of wine is $_____ per bottle. Of this amount, the burden that falls on consumers is...
Suppose that the U.S. government decides to charge wine producers a tax. Before the tax, 10...
Suppose that the U.S. government decides to charge wine producers a tax. Before the tax, 10 million bottles of wine were sold every month at a price of $4 per bottle. After the tax, 3 million bottles of wine are sold every month; consumers pay $7 per bottle, and producers receive $2 per bottle (after paying the tax). The amount of the tax on a bottle of wine is -----per bottle. Of this amount, the burden that falls on consumers...
Government Trade Policy Whose interests should be the paramount concern of government trade policy—the interests of...
Government Trade Policy Whose interests should be the paramount concern of government trade policy—the interests of producers (businesses and their employees) or those of consumers?
Calculating tax incidence Suppose that the U.S. government decides to charge beer consumers a tax. Before...
Calculating tax incidence Suppose that the U.S. government decides to charge beer consumers a tax. Before the tax, 50,000 cases of beer were sold every week at a price of $7 per case. After the tax, 43,000 cases of beer are sold every week; consumers pay $10 per case (including the tax), and producers receive $5 per case.   The amount of the tax on a case of beer is $_____ per case. Of this amount, the burden that falls on...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT