Suppose that an ad valorem tax of 10% is imposed on producers of butter. The bread market supply is Qs = 10 + P and the bread market demand is Qd = 220-P. What is the producers’ tax burden? A) Producers’ tax burden is $8. B) Producers’ tax burden is $10 C) Producers’ tax burden […]
Date: September 9th, 2020
Suppose the market for grass seed can be expressed as Demand: QD = 100 – 2p Supply: QS = 3p Price elasticity of supply is constant at 1. If the demand curve is changed to Q = 10 – .2p, price elasticity of demand at any given price is the same as before. Yet, the […]
Date: September 9th, 2020
Suppose the market for grass seed is expressed as Demand: QD = 100 – 2p Supply: QS = 3p Price elasticity of supply is constant at 1. If the supply curve is changed to Q = 8p, price elasticity of supply is still constant at 1. Yet, with the new supply curve, consumers pay a […]
Date: September 9th, 2020
If the government decides to levy an ad valorem tax on product with a perfectly inelastic supply. The consumers tax incidence will be A) 0 B) 1 C) .5 D) Cannot be determined. ANSWER A
Date: September 9th, 2020
A specific tax on sellers will A) shift the demand curve to the right. B) shift the demand curve to the left. C) shift the supply curve to the right. D) shift the supply curve to the left. ANSWER D
Date: September 9th, 2020
The tax incidence of a specific tax or ad valorem tax is influenced by A) who pays the tax. B) the amount of the tax. C) the price elasticities of supply and demand. D) All of the above. ANSWER C
Date: September 9th, 2020
Who will bear the burden of a $0.50 tax placed on soda suppliers (consumer or seller) in a soda market where Qd = 225-10P and Qs = 50 + 15P? A) Consumers pay $0.30 of the tax, bearing the burden. B) Consumers pay $0.25 of the tax, bearing the burden. C) Sellers pay $0.25 of […]
Date: September 9th, 2020
If the supply curve is perfectly inelastic and the demand curve is a downward sloping straight line, what is the effect of a consumer ad valorem tax on equilibrium price and quantity? A) Price remains unchanged and quantity increases. B) Price decreases and quantity increases. C) Price decreases and quantity remains unchanged. D) Price and […]
Date: September 9th, 2020
Suppose that a specific tax of $3 is imposed on consumers of bread. The bread market supply is Qs = 10 + 0.5P and the bread market demand is Qd = 100-P. What is the consumers’ tax burden? A) Consumers’ tax burden is $1.30. B) Consumers’ tax burden is $1.00. C) Consumers’ tax burden is […]
Date: September 9th, 2020
In the case of a specific tax, tax incidence is independent of who pays A) only when supply and demand elasticities are not constant. B) only when the tax is collected from consumers. C) in most but not all cases. D) in all cases. ANSWER D
Date: September 9th, 2020
