Answered: What if any are the effects of taxation…

Business

Economics

What if any are the effects of taxation on a normal profit

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Design Of The Tax System

Section: Chapter Questions

Problem 2CQQ

See similar textbooks

Related questions

Q: 1. The government imposes a $1 per unit tax on suppliers.What price will the buyers pay after the $1…

A: Equilibrium in economics is the state of stability and balance. Any deviation from this level will…

Q: Give an example of a product that has inelastic demand and elastic supply in the market to price. If…

A: An inelastic demand is defined as one where a change in price does not significantly impact demand…

Q: The market for soft drinks is perfectly competitive. Assume that the supply of soft drinks is point…

A: Here, it is given that the supply of soft drinks is point elastic and slopes upward, and, demand for…

Q: In many countries, income earned from financial investments is taxed at a higher rate than income…

A: The answer and correct explanation for the given question is as follows:-

Q: Suppose an ad valorem tax is imposed in which the Consumer Burden of the tax is less than the…

A: The value which is based on the transaction or the property is known as ad voleram tax. The term AD…

Q: Compared to consumers, producers will lose the greater amount of surplus from a tax if supply is…

A: The correct Option is (A) That is the supply is more elastic than the demand

Q: When the price elasticity of supply is relative to the price elasticity of demand, then sellers bear…

A: Since you have posted multiple independent questions in the same request, we will solve the first…

Q: The federal government currently levies a 15.3 percent payroll tax (7.65 percent on both the…

A: Answer: A (fall primarily on employees) Explanation: The burden of the tax falls more on employees…

Q: Suppose legislation is passed stating that a per unit tax of $.50 per gallon of gasoline must be…

A: Answer-

Q: When a good is taxed, the burden of the tax fallsmainly on consumers ifa. the tax is levied on…

A: Tax: A compulsory payment to state revenue levied by the government on worker's income and firm's…

Q: Generally speaking, how do taxes affect markets? What affect does legal incidence have on…

A: Taxes is the mostly government as their major source of income.Simply put, they are a tax or fee…

Q: The demand and supply in a perfectly competitive market are QD = 60 - p and QS = 2p , respectively.…

A: QD=60-p and QS=2p In market equilibrium QD=QS so p=$20 and quantity =40 units

Q: At the current market equilibrium, the price elasticity of supply for a certain good is much lower…

A: Given: Price elasticity of supply is lower than price elasticity of demand . Government imposes a…

Q: The city government is considering two tax proposals: • A lump-sum tax of $300 on each producer of…

Q: Which of the following statements are correct? The statutory or legal incidence of a tax determines…

A: The tax can be divided into two categories such as per unit tax and lumpsum tax. Any tax results in…

Q: Suppose the government wants to raise additional tax revenues with the least disruption to…

A: Tax revenue is the product of tax per unit and quantity sold after tax.

Q: If a tax is imposed on the buyer, the amount the buyer pays will always increase by the amount of…

A: The incidence of tax depends upon the elasticity of demand and supply. When the supply of the good…

Q: Consider the market for junk food. Illustrate and explain the effects on price, quantity and the…

A: The market for junk food is represented in the below steps.

Q: Find the consumer and producer tax burden. e) Calculate the tax revenue that the government…

A: The tax Shifts the supply curve to the left and decreases supply which decreases the quantity and…

Q: An income tax put on a person's income raises the same amount of revenue as a quantity tax put on…

A: People are exposed to a consumption tax when they spend money, similar to how much they buy. When…

Q: Suppose the supply curve for cars is more elastic than the demand curve for cars. If the government…

A: Tax incidence can be shifted only through sale and purchase transaction. Share of tax borne by the…

Q: There is an _________ relationship between tax rate and supply of a good

A: The tax imposed by the government and the subsidy lend by the government all impacts the cost of…

Q: Suppose the California legislature passed a sweeping law to lower the number of regulations for…

Q: why do comsumers pay the tax on goods if the elasticity of demand is less than the elasticty of…

A: Demand is said to be inelastic when the change in price leads a change in quantity demanded in…

Q: Suppose producers bear most of the burden of a specific tax of 20 cents on staplers. Which ONE…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Green et al. (2005) estimate that the demand elasticity is -0.47 and the long-run supply elasticity…

Q: Suppose the government imposes a $10 per unit tax on a good with a demand and a supply depicted in…

A: An excise tax is a per unit tax on commodity.

Q: Suppose the market for cigarette is competitive. An economist estimates the price elasticity of…

A: It is given that elasticity of demand= -0.8, and elasticity of supply=0.7 is inelastic in nature.…

Q: Government-imposed taxes cause reductions in the activity that is being taxed, which has important…

A: There are many sub-parts of the question. As per honor code, we can only provide solution of first…

Q: Suppose the demand curve for a good is highly elastic and the supply curve is highly inelastic. If…

A: The burden of a tax is generally shared by the buyers and sellers in a market. In other words, the…

Q: Suppose a tax is imposed on a product that has a completely inelastic supply curve. Who pays the tax

A: Elasticity of supply curve depicts how much producer responds with the change in the price level.

Q: Suppose the market for cigarette is competitive. An economist estimates the price elasticity of…

A: Tax burden of buyers = Es / (Es - Ed), where Ed: Elasticity of demand Es: Elasticity of supply

Q: The demand for mineral water is P=10 – (2/3) Q and supply function for mineral water isP=1+(1/3)Q…

A: P = 10 – (2/3)Q (Demand Equation) P = 1+(1/3)Q (Supply Equation) To find out the equilibrium…

Q: The UK government is considering the introduction of a unit tax on meat to alleviate the impact of…

A: Imposition of taxes on any good leads supply curve to move leftwards as the producer is unable to…

Q: Given the demand and supply equations below, show the burden of a 50% tax on the producers. What is…

A: Answer -

Q: Suppose that the Australian government imposes a sales tax on a product and both buyers and sellers…

A: Meaning of Price Elasticity of Demand: The price elasticity of demand refers to the situation…

Q: If a tax is levied on the seller of a product the demand curve will shift downward will not change…

A: Tax is the amount of money from the income earned that individuals and corporations have to pay to…

Q: The demand for mineral water is P=10 – (2/3) Q and supply function for mineral water isP=1+(1/3)Qa)…

A: At equilibrium, quantity demanded = quantity supplied. Elasticity of demand is % change in quantity…

Q: When the price of demand is high and the price elasticity is low the burden of a tax falls primarily…

A: Elasticity of demand depicts how much consumer responds with the change in price.

Q: A specific tax will be imposed on a good. The supply and demand curves for the good are shown in the…

A: The term "tax incidence" (or tax incidence) refers to how a tax burden is distributed across…

Q: After economics class one day, your friend suggests that taxing food would be a good way to raise…

A: A regressive tax is a type of tax that is imposed in a manner that the tax rate reduces with the…

Q: 1 Francesca buys pencils and erasers at 10$ and 9$ per amount. Francesca has an income of 90$. There…

A: Tax refers to the money collected by the government from the firms and individuals for spending on…

Q: Tax incidence indicates O A. who is not legally required to send a tax payment to the government. O…

A: Tax: It is the amount of money that is paid by the people to the government.

Q: Suppose you are an aid to the Odododiodo Member of Parliament who is concerned about the impact of a…

A: The equilibrium is established where the demand and supply forces are equal.

Q: For what kind of preferences will the consumer be just as well-off facing a quantity tax as an…

A: Consumer well-off facing a quantity tax in the case of the kinked demand curve for the complement…

Q: Suppose the California legislature passed a sweeping law to lower the number of regulations for…

A: In this case sweeping law will empowers California government to make necessary law and give proper…

Q: When an excise tax is imposed on sellers, the of the tax. curve shifts by the amount supply;…

A: Correct answer "supply; upward".

Question

What if any are the effects of taxation on a normal profit?

Rules by which an authority (usually a government) imposes a financial obligation on individuals or organizations within its domain. Property or transactions can be taxed. While taxes are primarily intended to fund the operation of a government, many tax laws are created to encourage or discourage certain behaviors by citizens or companies.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

What happens to a country's economy if there is a high tax for the company that earns more in that country?
why do comsumers pay the tax on goods if the elasticity of demand is less than the elasticty of supply?
Do you think profit could be maintained if the tax burden were simply passed on to the consumers in the form of higher selling price? How will this affect sales? Explain.
Suppose the government imposes a tax of $20 million per month on cable producers. If Comcast wants to maximize its profit, what price per subscription should it charge per month?
What is the price firms receive after the tax is in place
If a tax of $1.20 is imposed on consumers in this market, what is the tax revenue?
Is it true, as many people claim, that taxes assessed on producers are passed along to consumers? That is, do consumers pay for the entire tax?
The tax on cigarettes in New York City is one of the highest in the nation—$5.85 per pack. What are some of the secondary effects of this tax? Check all that apply.
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?
How would I calculate a dead weight loss for a tax of $3 using this graph?
Suppose the market for cigarette is competitive. An economist estimates the price elasticity of demand and supply for cigarette are -0.8 and 0.7 respectively. Suppose the government imposes a per-unit tax of $45 on the cigarette sellers. By how much would buyers share the tax burden respectively? Show your calculation.
How can the government improve tax collections without imposing much tax to the consumer?