Question

1) Tax incidences are majorly affected by the elasticity of demand and elasticity of supply. Using the partial equilibrium illustrate the tax incidence of a unit tax when

Demand curve and supply curve are fairly elastic

When demand curve is perfectly elastic and supply curve is fairly elastic

When supply curve is perfectly inelastic and demand curve is fairly elastic

2) Discuss any four factors that affect the shift of tax burden

Answer #1

4.
If Supply and Demand have the normal shapes (not perfectly
elastic or inelastic), a "tax on sellers" (as defined by Mankiw)
will shift demand upward by less than the amount of the tax, and
equlibrium posted price will increase by the same amound as the
tax.
True or False?
6.
If Supply and Demand have the normal shapes (not perfectly
elastic or inelastic), a "tax on sellers" (as defined by Mankiw)
will shift demand upward by the amount of...

4A
The price elasticity along a negatively sloped linear demand
curve
1 changes at every point
2 is less than 1
3IS INFINITE
4 is equal to 1
5 is zero
28A
If demand curve is more elastic relative to supply
sellers pay a larger portion of the excise tax.
B.
consumer price increases by the amount of the tax.
C.
entire burden of the tax is borne by the sellers.
D.
sellers pay a smaller portion of the excise...

What is perfectly elastic demand/supply? Draw a graph to
represent perfectly elastic demand/supply.
What is perfectly inelastic demand/supply? Draw a graph to
represent perfectly elastic demand/supply.
When the price of t-shirts increases by 12 percent, the quantity
of t-shirts demanded falls by 20 percent. Calculate the price
elasticity of demand. Is the demand for t-shirts elastic,
inelastic, or unit elastic?
When the price of t-shirts falls by 30 percent, the quantity of
t-shirts supplied decreases by 20 percent. Calculate the...

For each of the following assume that the supply curve shifts
while the demand curve remains constant. What is the direction of
the supply shift and relative elasticity of demand?
1.) Price falls significantly. Quantity hardly changes at
all.
Demand is ____
a.) perfectly elastic
b.)highly inelastic
c.)highly elastic
2.) Prices do not change. Quantity decreases significantly.
Demand is _________
a.) highly elastic
b.) perfectly elastic
c.) highly inelastic
Can anyone help?

What a big tax on soft drink can do
A big tax on sugary drinks in Mexico has cut consumption.
Sellers passed on the entire tax in higher prices. The largest
consumers of sugary drinks are the poor who suffer from diabetes
and obesity.
Source: The New YorkTimes, October 19, 2015
What can we say about the incidence of Mexico's tax on sugary
drinks and what can we infer about the elasticities of supply and
demand for these drinks?
Would...

Elasticity and Tax: For questions (a) and (b), please indicate
whether the statement is True or False and explain. (a)(True/False)
Suppose supply is perfectly inelastic and demand the demand
elasticity equals 1. Then there is no deadweight loss in total
surplus from a tax. Draw a graph to explain. (b) (True/False)
Suppose demand is perfectly elastic and the supply elasticity
equals 1. Then there is no deadweight loss in total surplus from a
tax. Draw a graph to explain.(Hint: Demand...

Carefully explain (using diagrams) why is the point of
intersection between supply and demand for a product point of
equilibrium price and quantity and no other point. What happens if
price is above or below the point of equilibrium and how is the
equilibrium price and quantity restored?
What is price elasticity of demand?
What determines whether a product’s demand is elastic, inelastic,
unitary elastic, perfectly elastic and perfectly inelastic? What is
mid-point formula to determine the elasticity of demand...

A market in perfect competition is in equilibrium. Let the
demand's price elasticity be -1.25 and the price elasticity of the
offer is 0.25. If a tax of $ 10 per unit is introduced, who will
then carry the largest part of the tax burden?
A. Consumers, since demand is relatively more elastic than the
supply
B. Consumers, then demand. is relatively more inelastic than the
supply
C. Manufacturers, as the supply is relatively more elastic than
demand.
D. The...

1.
The Price Elasticity of Demand for a good is −0.78. Which of the
following describes the Price Elasticity of Demand?
Group of answer choices
Elastic
Inelastic
Unit elastic
Perfectly elastic
2.
The Price Elasticity of Demand for a good is −1.11. Which of the
following describes the Price Elasticity of Demand?
Group of answer choices
Elastic
Inelastic
Unit elastic
Perfectly elastic

A life-saving medicine without any close substitutes will tend
to have a small elasticity of demand. a large elasticity of demand.
a small elasticity of supply. a large elasticity of supply. The
price of a good rises from $8 to $12, and the quantity demanded
falls from 110 to 90 units. Calculated with the midpoint method,
the price elasticity of demand is 1/5. 1/2. 2. 5. A linear,
downward-sloping demand curve is inelastic unit elastic. elastic.
inelastic at some points,...

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