An ad valorem tax of 30% applies to Nike sneakers which have a market price (i.e....

An ad valorem tax of 30% applies to Nike sneakers which have a market price (i.e. price including the tax) of $80 per pair. What price (in dollars) should be used for a pair of sport shoes in an efficiency CBA under each of the following sets of circumstances? (You must also give an example for each of the 8 scenarios below to explain the why you chose that price)
a. The tax is distortionary, and the commodity is a project output which replaces existing demand from alternative source; $ ___________________
b. The tax is distortionary, and the commodity is a project output which satisfies additional demand; $ ___________________
c. The tax is distortionary, and the commodity is a project input which is sourced from an alternative market use; $ ___________________
d. The tax is distortionary, and the commodity is a project input which is sourced from additional supply; $ ___________________
e. The tax is corrective, and the commodity is a project output which replaces existing demand from alternative source; $ ___________________
f. The tax is corrective, and the commodity is a project output which satisfies additional demand; $ ___________________
g. The tax is corrective, and the commodity is a project input which is sourced from an alternative market use; $ ___________________
h. The tax is corrective, and the commodity is a project input which is sourced from additional supply. $ ________________

Expert Solution

ekkarill92 answered 2 years ago

Ad valorem tax and supply curve

1.Consider an ad valorem tax on a luxury good such as cigars. Suppose the current tax...

1.Consider an ad valorem tax on a luxury good such as cigars. Suppose the current tax rate is 75%. If the tax rate is increased to 100%, what will happen to government tax revenue? Select one: Government tax revenue will fall to zero Government tax revenue will definitely decrease Government tax revenue will likely decrease Government tax revenue will likely increase Government tax revenue will definitely increase There is not enough information to tell 2.In Canada, income from capital gains...

By using the partial equilibrium framework, explain who bears the burden of an ad valorem tax...

By using the partial equilibrium framework, explain who bears the burden of an ad valorem tax levied on buyers i.e. consumers.

Explain and illustrate how excise taxes, ad valorem taxes, price floors, and price ceilings impact the...

Explain and illustrate how excise taxes, ad valorem taxes, price floors, and price ceilings impact the functioning of a market.

business that produces foreign brand sneakers claims to have more than 30% of the market share...

business that produces foreign brand sneakers claims to have more than 30% of the market share in the Aegean Region. For this purpose, it was observed that this brand was preferred by 89 people from 850 people in an area survey. α = 0.08 . (C: H0 Is not reject)

The Olympians have three children. The kiddie tax applies to unearned income received by which of...

The Olympians have three children. The kiddie tax applies to unearned income received by which of the following children? Multiple Choice Poseidon is a 20-year-old full-time student who does not support himself Demeter is a 23-year-old full-time student who supports herself with a job at a grocery store Zeus is 20 years old and not a student Demeter is a 23-year-old full-time student who supports herself with a job at a grocery store and Zeus is 20 years old and...

If a security is underpriced (i.e. intrinsic value > market price), then what is the relationship...

If a security is underpriced (i.e. intrinsic value > market price), then what is the relationship between its market capitalization rate (k) and its expected rate of return (EHPR)? Briefly explain your answer. (if you can point out all of the points needed to answer this so I can turn that into 400 words) [For this theoretical sub-question a word limit of 400 word is required.]

Is the free market equilibrium (i.e. allocatively efficient) the point at which social welfare (i.e. consumer...

Is the free market equilibrium (i.e. allocatively efficient) the point at which social welfare (i.e. consumer surplus + producer surplus - deadweight loss) is maximised? Moreover, do Pigouvian (assuming to tax accurately captures the effect of the externality) taxes necessarily lead to an increase in social welfare?

Single-Price Monopoly: Consider a single-price monopolist (i.e. the monopolist cannot price discriminate) facing the following market...

Single-Price Monopoly: Consider a single-price monopolist (i.e. the monopolist cannot price discriminate) facing the following market demand curve: P = 120 − Q. The monopolist has constant marginal cost of $20 and zero fixed cost. (a) Determine the monopolist’s profit maximizing quantity, denoted QM, and profit-maximizing price, denoted PM. (b) Determine the quantity and price that would result in the market if this instead were a competitive market, denoted QC and PC, respectively. (c) Draw a picture of the market...

We have learned in class that tax distorts market equilibrium price, reduces the quantity purchased/produced, and...

We have learned in class that tax distorts market equilibrium price, reduces the quantity purchased/produced, and induces deadweight loss. Although tax revenue is indispensable for any country’s financial sovereignty, governments sometimes cut taxes as a stimulus for economy growth. In 2009, when financial crisis hit Europe, household spending was greatly dampened because people were concerned about their income perspectives. To revitalize the economy, many European governments decided to intervene by providing economic stimulus packages. Among these measures, the French government...

Question