Question

Elasticity and Tax: For questions (a) and (b), please indicate whether the statement is True or...

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 curve is horizontal and supply curve is upward sloping)

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
1) Tax incidences are majorly affected by the elasticity of demand and elasticity of supply. Using...
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
67. Suppose demand for electricity is inelastic, but not perfectly. A sales tax is imposed, and...
67. Suppose demand for electricity is inelastic, but not perfectly. A sales tax is imposed, and the tax is levied on buyers. Draw a graph to show the effects of the tax. Indicate CS, PS, tax revenue and DWL after tax on your graph. 68. Suppose supply is perfectly inelastic and demand is relatively elastic. Who bear all the tax burden, buyers or sellers? Explain in details.
2. Suppose supply is perfectly inelastic and demand is relatively elastic. Who bear all the tax...
2. Suppose supply is perfectly inelastic and demand is relatively elastic. Who bear all the tax burden, buyers or sellers? Explain in details. 3. Suppose demand for electricity is inelastic, but not perfectly. A sales tax is imposed, and the tax is levied on buyers. Draw a graph to show the effects of the tax. Indicate CS, PS, tax revenue and DWL after tax on your graph.
4. If Supply and Demand have the normal shapes (not perfectly elastic or inelastic), a "tax...
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...
Determine whether or not the following statements are true or false. A. A tax cut that...
Determine whether or not the following statements are true or false. A. A tax cut that raises the after-tax wage rate will most likely result in more hours worked if the substitution effect outweighs the income effect. B. If the income-consumption curve is upward sloping, then the price consumption curve (as the price of x changes) must be upward sloping too. C. If the income-consumption curve is a horizontal line, then the cross-price elasticity of demand for good y with...
Using the information from Deadweight Loss from Wireless Taxes LOADING... ​, draw graphs to illustrate why...
Using the information from Deadweight Loss from Wireless Taxes LOADING... ​, draw graphs to illustrate why the tax on landlines creates no deadweight loss while the tax on cell phones creates a more substantial deadweight loss. ​1.) Use the line drawing tool to draw the demand for landline minutes. Label this line​ 'landline'. ​2.) Use the line drawing tool to draw the demand for wireless minutes. Draw the curve such that wireless​ demand, landline demand and supply intersect at the...
True or False: Indicate whether each of the following statements is true or false and explain...
True or False: Indicate whether each of the following statements is true or false and explain why. 4. The industry supply curve could be downward sloping in the long run. The market for apartment rentals is in equilibrium when the rent is $1000 per month and the quantity of apartments rented is 2,000. A rent control law is passed that sets the maximum rent at $800. If the elasticity of demand for apartments is 1.2 and the elasticity of supply...
4A The price elasticity along a negatively sloped linear demand curve 1 changes at every point...
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...
Demand elasticity and social loss. Consider two vaccines for different viruses ? and ?. Assume that...
Demand elasticity and social loss. Consider two vaccines for different viruses ? and ?. Assume that the marginal cost of producing both drugs is constant and that the fixed cost is small. In other words, assume that the supply curve for both drugs is flat (horizontal). Market for Vaccine ? Market for Vaccine ? Suppose that demand for vaccine ? is price elastic, whereas demand for vaccine ? is relatively inelastic. Using the graphs above, draw two demand curves: one...
Suppose a commodity tax is levied on a product. The supply curve is linear and upward...
Suppose a commodity tax is levied on a product. The supply curve is linear and upward sloping and the demand curve is linear and downward sloping. The tax lowers the consumer surplus by $300 and lowers the producer surplus by $200. The deadweight loss is $50. The government tax revenue is $[Answer]. Now, suppose we learned that the tax rate is $10 per unit. The equilibrium quantity after the tax must be [Answer]. Consequently, we conclude that the equilibrium quantity...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT