“Taxes create a wedge between price buyers pay and price sellers sell, but the incidence of...

“Taxes create a wedge between price buyers pay and price sellers sell, but the incidence of a tax depends on the price elasticities of supply and demand, and NOT necessarily who the government requires to pay the tax from their pocket. Discuss this statement and provide an example that shows the tax burden is shared by both buyers and sellers “in some proportion, and not necessarily 50-50”.

Expert Solution

Rahul Sunny answered 2 years ago

1. Taxes drive a wedge between the: quantity bought and the price received by sellers. price...

1. Taxes drive a wedge between the: quantity bought and the price received by sellers. price paid by buyers and the quantity received by sellers. income of the buyers and the incomes received by sellers. price paid by buyers and the price received by sellers. 2. Which of the following explains why most people’s marginal tax rate is higher than their average tax rate? The average tax rate is the tax you pay on your last dollar earned, while the...

Tax incidence. Determine graphically the incidence (on buyers and sellers) of a unit tax imposed on...

Tax incidence. Determine graphically the incidence (on buyers and sellers) of a unit tax imposed on sellers. Show how changes in demand elasticity change the relative incidence.

In general, a tax raises the price the buyers pay, lowers the price the sellers receive,...

In general, a tax raises the price the buyers pay, lowers the price the sellers receive, and reduces the quantity sold. Select one: True False Question 23 Not yet answered Marked out of 1.00 Flag question Question text Which of the following goods would you expect to have an elastic demand with respect to income? a. Restaurant meals b. Floor c. Gasoline Clear my choice Question 24 Not yet answered Marked out of 1.00 Flag question Question text Economists assume...

A tax a. lowers the price buyers pay and raises the price sellers receive. b. raises...

A tax a. lowers the price buyers pay and raises the price sellers receive. b. raises the price buyers pay and lowers the price sellers receive. c. places a wedge between the price buyers pay and the price sellers receive. d. Both b) and c) are correct.

The difference between what buyers pay for a unit of a good and what sellers receive...

The difference between what buyers pay for a unit of a good and what sellers receive is known as the

18. The difference between what buyers pay for a unit of a good and what sellers...

18. The difference between what buyers pay for a unit of a good and what sellers receive is known as the * brokerage fee. tax (tax wedge). cost of production. interest (interest rate). 19. Diversification does which of the following? * Reduces expected returns Does not impact expected returns Increases expected returns 20. When businesses pay their sales people based on their performance relative to their peers, this is known as * salary pay. a tournament. a piece rate system....

a. What will happen to the price buyers pay per gallon, the price sellers receive per gallon, and the number of gallons consumed each day?

Suppose the demand for and supply of ethanol in a small town are as follow:Qd = 9,000 - 1,000PQs = 2,000P - 3,000● Where Q measures gallons per day and P represents price per gallon. The current equilibrium price $4, and the current equilibrium quantity is 5,000 gallons per day.● Now suppose that the government wants to create a subsidy of $0.375 per gallon to encourage the use of ethanol.a. What will happen to the price buyers pay per gallon,...

Suppose for the market for housing that both buyers and sellers expected the price to increase....

Suppose for the market for housing that both buyers and sellers expected the price to increase. Which of the following would result? Group of answer choices Price rises and quantity rises Price falls and quantity is unclear Price rises and quantity is unclear None of the above

In a market where there are many price-taking buyers and sellers, there are many possible equilibrium...

In a market where there are many price-taking buyers and sellers, there are many possible equilibrium prices. Each of these prices represents a Nash equilibrium for this market. True or False?

Economists regard the labor market as a negation between buyers and sellers of labor, Does this...

Economists regard the labor market as a negation between buyers and sellers of labor, Does this describe what happened at Carnegie’s Steel Mill? How Did Herbert Spencer’s “Social Darwinism” influence Carnegie’s thinking?

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