Question

In: Economics

If a tax is levied on the buyers of dog food, then buyers will bear the...

If a tax is levied on the buyers of dog food, then

buyers will bear the entire burden of the tax.

sellers will bear the entire burden of the tax.

buyers and sellers will share the burden of the tax.

the government will bear the entire burden of the tax.

Solutions

Expert Solution

If a tax is levied on the buyers of dog food, then buyers and sellers will share the burden of the tax. The share in the burden of tax will be based on the elasticity of demand and supply. More elastic the demand, lower share of tax burden will be on buyers and vice versa.


Related Solutions

Supply of good A is perfectly inelastic. Suppose a tax is levied on buyers. Draw a...
Supply of good A is perfectly inelastic. Suppose a tax is levied on buyers. Draw a graph to show the impacts on the market for good A. Your graph should indicate the CS, PS, tax revenue and DWL after tax.
A. Suppose a 10% tax is levied on the sale of sugary beverages. This tax is...
A. Suppose a 10% tax is levied on the sale of sugary beverages. This tax is collected from sellers of the drinks. A critic of the tax argues that sellers will shift the entire tax to buyers and therefore be no worse off. Evaluate this argument by explaining and illustrating (a graph) the market conditions that would have to prevail for the prediction to be correct. If the critic is correct, how successful will the tax be regarding decreasing obesity...
A dog food manufacturer is using a new process to make his dog food.  He believes the...
A dog food manufacturer is using a new process to make his dog food.  He believes the new process affects the taste of the food.  To test the new process, the company recruited 9 dogs. The dogs were given the original food and the time required to eat a standard portion of the food was measured. Two days later the same dogs were fed the same quantity of the new formula and the time was measured again. Eating faster is assumed to...
A dog food manufacturer is using a new process to make his dog food.  He believes the...
A dog food manufacturer is using a new process to make his dog food.  He believes the new process affects the taste of the food.  To test the new process, the company recruited 9 dogs. The dogs were given the original food and the time required to eat a standard portion of the food was measured. Two days later the same dogs were fed the same quantity of the new formula and the time was measured again. Eating faster is assumed to...
Suppose there is a $1.50 per unit tax levied on sellers
Consider the market below a. Suppose there is a $1.50 per unit tax levied on sellers. Draw the after-tax supply curve. Instructions: Use the tool provided (S2) to draw the after-tax supply curve. Be sure your endpoints are at Q = 0 and Q = 100 b. Plot the after-tax price paid by consumers and the after-tax price paid by sellers. Instructions: Use the tools provided to draw the after-tax price paid by consumers (After-tax Pc) and the after-tax price paid by...
“When a tax is levied on a good, a share of it is paid by both...
“When a tax is levied on a good, a share of it is paid by both the consumer and producer. In the case of cigarettes however much more of the burden of the tax is paid by consumers, even though the tax is levied on the suppliers of cigarettes.” Why might this be the case? In your answer explain both parts (sentences) of this statement. If the price of a packet of cigarettes increased by 10%, and in light of...
“When a tax is levied on a good, a share of it is paid by both...
“When a tax is levied on a good, a share of it is paid by both the consumer and producer. In the case of cigarettes, however much more of the burden of the tax is paid by consumers, even though the tax is levied on the suppliers of cigarettes.”Why might this be the case? In your answer explain both parts (sentences) of this statement. If the price of a packet of cigarettes increased by 10%, and in light of your...
Amiens Company manufactures both dry and semimoist dog food, with each type of dog food produced...
Amiens Company manufactures both dry and semimoist dog food, with each type of dog food produced in separate departments. Three service departments support the production departments and the data concerning the five departments are as follows: Service Departments Production Departments Personnel   Maintenance General Factory Dry Semimost Overhead costs $60,000 $40,000 $160,000 $120,000        $150,000 Square feet occupied 3,000 2,000 - 6,750 8,250 Machine hours 4,000 - 6,000 36,000 54,000 Number of employees - 14 16 21 35 The personnel costs are...
Who will bear the burden of tax if the tax is collected from the supplies, if...
Who will bear the burden of tax if the tax is collected from the supplies, if A. Supply is perfectly elastic? B. Supply is perfectly inelastic? C. Demand is perfectly elastic? D. Demand is perfectly inelastic?
Many dog owners see the benefit of buying natural dog food and treats. Dog Day Afternoon...
Many dog owners see the benefit of buying natural dog food and treats. Dog Day Afternoon is a local company that creates its own dog food and treats. Their products are made locally and with natural ingredients. Sales are up and the owners of Dog Day Afternoon have decided to expand their business. Currently they are manually calculating sales. They need a computer program to help speed up the process. The owners of Dog Day Afternoon decided to get some...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT