Consider the competitive market for fresh pineapples. The government wants to impose a tax on the...

 

 

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Consider the competitive market for fresh pineapples. The government wants to impose a tax on the pineapple market and is considering the effects of taxes of different magnitudes on the market. 2.2. Now consider a tax on pineapples of s4 per pound. One way to show the effect of this tax is to shift the supply curve up by the amount of the tax (you can view the tax as an addition to the cost of the product). The graph below shows the demand for pineapples, the supply of pineapples before the tax is imposed, and the supply of pineapples after the $4 tax has been imposed. Place the black point (X symbol) on the demand curve to show the price that consumers pay after the pineapple tax has been imposed. Then place the red point (cross symbol) on the pre-tax supply curve to show the price that producers receive after the government has collected the tax. Drop lines will automatically extend to the vertical axis. PRICE (Dollars) 10 Consumer Price 9. Supply After Tax 8. Supply Before Tax Producer Price 7 6. 4 3 Demand 2 1 0 2 4 6 8 10 12 14 16 18 20 PINEAPPLES (Millions of pounds) Help Clear All Graphs Tool 1.55 © 2002-2013 Cengage Learning. All rights reserved. Consider two markets, Market A and Market B. Demand for goods in Market A is more elastic than the demand for goods in Market B. The elasticity of supply in the two markets is the same at all quantities. 3.1. If the government imposes the same excise tax on both of these markets, which of the following statements will be true? A. None of these statements are true. B. The efficiency loss (deadweight loss) in Market A will be larger than the efficiency loss (deadweight loss) in Market B. C. The efficiency losses (deadweight losses) in both markets will be equal. D. The efficiency loss (deadweight loss) in Market A will be smaller than the efficiency loss (deadweight loss) in Market B. Consider the competitive market for fresh pineapples. The government wants to impose a tax on the pineapple market and is considering the effects of taxes of different magnitudes on the market. 2.2. Now consider a tax on pineapples of s4 per pound. One way to show the effect of this tax is to shift the supply curve up by the amount of the tax (you can view the tax as an addition to the cost of the product). The graph below shows the demand for pineapples, the supply of pineapples before the tax is imposed, and the supply of pineapples after the $4 tax has been imposed. Place the black point (X symbol) on the demand curve to show the price that consumers pay after the pineapple tax has been imposed. Then place the red point (cross symbol) on the pre-tax supply curve to show the price that producers receive after the government has collected the tax. Drop lines will automatically extend to the vertical axis. PRICE (Dollars) 10 Consumer Price 9. Supply After Tax 8. Supply Before Tax Producer Price 7 6. 4 3 Demand 2 1 0 2 4 6 8 10 12 14 16 18 20 PINEAPPLES (Millions of pounds) Help Clear All Graphs Tool 1.55 © 2002-2013 Cengage Learning. All rights reserved. Consider two markets, Market A and Market B. Demand for goods in Market A is more elastic than the demand for goods in Market B. The elasticity of supply in the two markets is the same at all quantities. 3.1. If the government imposes the same excise tax on both of these markets, which of the following statements will be true? A. None of these statements are true. B. The efficiency loss (deadweight loss) in Market A will be larger than the efficiency loss (deadweight loss) in Market B. C. The efficiency losses (deadweight losses) in both markets will be equal. D. The efficiency loss (deadweight loss) in Market A will be smaller than the efficiency loss (deadweight loss) in Market B.

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University of Delhi PRICE Dollars 10 Consumer Pric... View the full answer