Sinead commutes from her suburban residence to the city center. When asked her opinion of a proposed congestion tax of $5 per trip, she says, “Of course I oppose the congestion tax. It would make me worse off by $5 per trip. What do you think I am, stupid?” Critically appraise Sinead’s statement.
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Sinead commutes from her suburban residence to the city center. When asked her opinion of a proposed congestion tax of $5 per trip, she says, “Of course I oppose the congestion tax. It would make me worse off by $5 per trip. What do you think I am, stupid?” Critically appraise Sinead’s statement.
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- Philadelphia and several other cities have imposed an excise tax on sugary drinks (it’s aimed primarily at sodas such as Coca-Cola and Pepsi-Cola, but would apply to all drinks with high sugar content). Philadelphia’s tax significantly increases the price of sodas and other sugary beverages. While other cities have cited the health benefits of cutting back on sugar consumption as the reason for an excise tax on sugary drinks, Philadelphia’s mayor said that his city would impose the tax to raise revenue for the city government to pay for pre-kindergarten and other popular services. Which is an excise tax on sugary drinks more likely to accomplish: a large reduction in the consumption of sugary drinks, or a large boost in revenue for local government? Justify your answer, being sure to identify the concept that your justification rests on.Suppose the California legislature passed a sweeping law to lower the number of regulations for building homes such as decreasing the parking requirements and setback requirements. Suppose there is a housing tax. What is the effect of this law on the PES for housing? What effect would this law have on the tax burden for buyers?Suppose the California legislature passed a sweeping law to lower the number of regulations for building homes such as increasing the parking requirements and setback requirements. Suppose there is a housing tax. What is the effect of this law on the PES for housing? What effect would this law have on the tax burden for buyers?
- Suppose that the government tends to maximize the tax revenue. How would the cannabis price drop affect the government tax revenue if cannabis was taxed by price? Did the government anticipate the cannabis price drop when designing the tax scheme. You may come up with an artificial numerical example to support your findings. are alcohol and cigarettes substitutes or complements of cannabis? How would the change in the price of cannabis possibly affect the market demand curve for alcohol/cigarettes?Suppose the price elasticity of demand for smartphones is 0.5 (absolute value), while the price elasticity of supply is 1.9. If the government imposes a per-unit tax of $100 on the sellers of smartphones, how will the price and quantity transacted of smartphones change? Will the sellers or the buyers bear a larger tax burden? Will the market be able to achieve economic efficiency after the tax is imposed? Explain with a diagram.Suppose the current price of gasoline at the pump is $4 per gallon and that 1 million gallons are sold per day. A politician proposes to add a $1 tax to the price of a gallon of gasoline. She says that the tax will generate $1 million in tax revenues per day. Explain the assumption that she is making.
- Imagine that you run the toll authority for a city bridge. You must charge all of your customers the exact same toll. Initially, you have set the price at $2 per trip. The following graph shows the daily demand curve for trips across the city bridge. On the following graph, use the purple rectangle (diamond symbols) to shade the area representing the total daily expenditure when the toll is $2 on the graph. Note: Select and drag the rectangles from the palette to the graph. To resize, select one of the points on the rectangle and move to the desired position. Once drawn, select inside the rectangle to see its area. TOLL (Dollars per vehicle) 10 9 8 2 1 0 Demand 01 2 3 4 5 6 7 8 9 QUANTITY (Thousands of vehicles per day) 10 When the toll is $2, total expenditure is $ An advisor has suggested that if you raise the toll to $3, total expenditure on tolls will rise. Total Expenditure at $2 per da Total Expenditure at $3 On the previous graph, use the green rectangle (triangle symbols) to…Look at the figure above. If the government assesses a tax of $0.75 on each latte, the price the consumer pays for a latte after the tax will: (explain please) increase from $2 to $2.75. increase from $2 to $2.50. increase from $2 to $2.25. change, but we cannot determine by how much.Example 2: In fall of 2011, the National Christmas Tree Association decided to impose a fee/tax of $0.15 per tree sold.² They claimed the tax revenue raised would fund a new marketing campaign for Christmas tree growers in response to growing plastic tree imports. The proposal quickly drew controversy: some argued that the fee/tax would be passed along in higher prices to consumers, but the National Christmas Tree Association says no. How does the answer to this question depend on the assumption about the price elasticity of demand? a. Consider two graphs of the market for Christmas trees. The supply curve in each market is assumed to be the same. In the left graph, assume the price elasticity of demand is relatively inelastic and in the right graph, assume the price elasticity of demand is relatively elastic. Add labels on your diagram to identify the equilibrium price and quantity of trees before the tax. b. Now, suppose retailers are assessed a tax of amount for each tree sold.…
- In a country the Government determines to increase the tax on gasoline by $0.20 per gallon. The price of gasoline after taxes though only goes up by $0.15. Does this mean the gas station is not collecting the correct amount of taxes?Economics Questionwhy do comsumers pay the tax on goods if the elasticity of demand is less than the elasticty of supply?