Question
In: Economics
If the government announces today that a tax increase of 80 cents per pack of cigarettes...
If the government announces today that a tax increase of 80 cents per pack of cigarettes is to take place in two weeks, what would you expect to happen today to the current market for cigarettes?
Solutions
Expert Solution
Future expectations with respect to price impacts the demand for a
good.
When consumer expects an increase in price of a commodity in future they tends to increase their current demand for the said commodity.
On the other hand, when consumer expects a decrease in price of a commodity in future they tends to decrease their current demand for the said commodity.
So, if the government announces today that a tax increase of 80 cents per pack of cigarettes is to take place in two weeks then, in that case, consumers would expect an increase in price of cigarettes in the near future.
Due to this, they will increase their current demand for cigarettes.
Given the supply of cigarettes, this increase in demand for cigarettes will lead to an increase in price of cigarettes and quantity exchanged of cigarettes.
Thus,
In the current market for cigarettes, price and quantity exchanged of cigarettes will increase.
Rahul Sunny answered 2 years agoRelated Solutions
A country which does not tax cigarettes is considering the introduction of a $0.40 per pack...
A country which does not tax cigarettes is considering the
introduction of a $0.40 per pack tax. The economic advisors to the
country estimate the supply and demand curves for cigarettes
as:
QD = 140,000 - 25,000P QS = 20,000 + 75,000P,
and The country has hired you to
where
provide the following information regarding the cigarette market
and the proposed tax.
What are the equilibrium values in the current environment with
no tax?
What price and quantity would prevail...
A country which does not tax cigarettes is considering the introduction of a $0.40 per pack...
A country which does not tax cigarettes is considering the
introduction of a $0.40 per pack tax. The economic advisors to the
country estimate the supply and demand curves for cigarettes
as:
QD = 140,000 -
25,000P QS =
20,000 + 75,000P,
where Q = daily sales in packs of cigarettes, and P = price per
pack. The country has hired you to provide the following
information regarding the cigarette market and the proposed
tax.
What are the equilibrium values...
A country which does not tax cigarettes is considering the introduction of a $0.40 per pack...
A country which does not tax cigarettes is considering the
introduction of a $0.40 per pack tax. The economic advisors to the
country estimate the supply and demand curves for cigarettes
as:
QD = 140,000
-25,000P Qs = 20,000 +
75,000P
Where Q = daily sales in packs of
cigarettes, and P = price per pack.
The country has hired you to provide
the following information regarding the cigarette market and the
proposed tax.
What are the equilibrium values in...
A country which does not tax cigarettes is considering the introduction of a $0.40 per pack...
A country which does not tax cigarettes is considering the
introduction of a $0.40 per pack tax. The economic advisors to the
country estimate the supply and demand curves for cigarettes as: QD
= 140,000 - 25,000P QS = 20,000 + 75,000P, where Q = daily sales in
packs of cigarettes, and P = price per pack. The country has hired
you to provide the following information regarding the cigarette
market and the proposed tax. a. What are the equilibrium...
A country which does not tax cigarettes is considering the introduction of a $0.40 per pack...
A country which does not tax cigarettes is considering the
introduction of a $0.40 per pack tax. The
economic advisors to the country estimate the supply and demand
curves for cigarettes as:
QD = 140,000 - 25,000P QS = 20,000 + 75,000P,
where Q = daily sales in packs of cigarettes, and P = price per
pack. The country has hired you to provide
the following information regarding the cigarette market and the
proposed tax.
a. What are the equilibrium...
The government announces a tax increase on workers' wages to take effect in the future. What...
The government announces a tax increase on workers' wages to
take effect in the future. What happens to current employment and
the real wage rate?
Both employment and the real wage rate would increase.
Both employment and the real wage rate would decrease.
Employment would increase and the real wage would decrease.
Employment would decrease and the real wage would increase.
If the government decides to impose a tax of 20 cents per litre on petrol, illustrate...
If the government decides to impose a tax of 20 cents per litre
on petrol, illustrate the impact of the tax on market
equilibrium price, and discuss whether the outcome is
efficient by demonstrating the change of consumer’s and producer’s
surplus as a result of the tax.
•Draw a demand and supply model, with demand curve.
•Show the shift of S as a result of 20 cent tax.
•Identify new equilibrium.
•Mark the price paid by consumer and received by...
In the US, the federal government charges a tax of 18.3 cents per gallon of gasoline...
In the US, the federal government charges a tax of 18.3 cents
per gallon of gasoline sold.
What type of tax is this?
Explain what effect this tax will have on the market for
gasoline. Illustrate your answer with a diagram.
Explain why this tax will cause the price of gasoline to rise,
but by less than 18.3 cents per gallon.
Is taxing gasoline likely to cause a significant decrease in
the amount of gasoline sold? Explain
•If the government decides to impose a tax of 20 cents per litre on petrol, draw...
•If the government decides to impose a tax of 20 cents per litre
on petrol, draw a graph the impact of the tax on market
equilibrium price, and discuss whether the outcome is
efficient by demonstrating the change of consumer’s and producer’s
surplus as a result of the tax.
•Draw a demand and supply model, with demand curve.
•Show the shift of S as a result of 20 cent tax.
•Identify new equilibrium.
•Mark the price paid by consumer and...
In the US, the federal government charges a tax of 18.3 cents per gallon of gasoline...
In the US, the federal government charges a tax of 18.3 cents
per gallon of gasoline sold.
What type of tax is this?
Explain what effect this tax will have on the market for
gasoline. Illustrate your answer with a diagram.
Explain why this tax will cause the price of gasoline to rise,
but by less than 18.3 cents per gallon.
Is taxing gasoline likely to cause a significant decrease in
the amount of gasoline sold? Explain
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- The equivalent synchronous impedance of a 25kVA, 400V three-phase Y-connected synchronous generator is 0.05 + j1.6...
- You have $100,000 to invest in either Stock D, Stock F, or a risk-free asset. You...
- In two or three sentences, explain how you have seen the concept of grit work in...
- You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella Co.,...
- Parallel Arrays This question is in MindTap Cengage Summary In this lab, you use what you...
- 5. You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella...
- JAVA Write a test program that prompts the user to enter a series of integers and...
ADVERTISEMENT