4. If Supply and Demand have the normal shapes (not perfectly elastic or inelastic), a "tax...

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?

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 the tax, and equlibrium posted price will increase by less than the tax.

Ture or False?

Solutions

Expert Solution

4) FALSE

The given statement 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 equilibrium posted price will increase by the same amount as the tax is a FALSE statement.
If the supply and demand have normal shapes, The tax on sellers will shift demand upward by the amount of tax amount. the equilibrium posted price will increase by more than the tax.

6) FALSE

the given statement 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 the tax, and equilibrium posted price will increase by less than the tax is FALSE statement.
As mentioned above If the supply and demand have normal shapes, The tax on sellers will shift demand upward by the amount of tax amount. the equilibrium posted price will increase by more than the tax.

Thanks

Rahul Sunny answered 1 year ago

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