Questions & AnswersMicroeconomics

 . The government is considering levying a tax of $100 per unit on...

Question
Answered step-by-step
Asked by MateBuffalo49 on coursehero.com

 . The government is considering levying a tax of $100 per unit on...

Screen Shot 2022-10-30 at 2.44.52 PM.png

Image transcription text

The government is considering levying a tax of $100 per unit on suppliers of either leather jackets or smartphones. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for leather jackets is shown by DL (on the first graph), and the demand for smartphones is shown by Ds (on the second graph). Suppose the government taxes leather jackets. The following graph shows the annual supply and demand for this good. It also shows the supply curve ( S + Tax) shifted up by the amount of the proposed tax ($100 per jacket). On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for leather jackets. Then use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax. Leather Jackets Market 240 220 Supply 200 S+Tax Tax Revenue 180 160 Deadweight Loss 140 PRICE (Dollars per jacket) 120 100 8 60 40 20 0 50 100 150 200 250 300 350 400 450 500 550 600 QUANTITY (Jackets)...
Screen Shot 2022-10-30 at 2.45.04 PM.png

Image transcription text

Instead, suppose the government taxes smartphones. The following graph shows the annual supply and demand for this good, as well as the supply curve shifted up by the amount of the proposed tax ($100 per phone). On the following graph, do for smartphones the same thing you did previously on the graph for leather jackets. Use the green rectangle (triangle symbols) to shade the area that represents tax revenue for smartphones. Then, use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax. / _\ \Z/ Smartphones Market 240 220 Supply 200 S+Tax Tax Revenue 180 ii 160 Deadweight L055 140 120 100 80 PRICE (Dollars per phone) 60 40 20 D 0 1—0—0—0—0—0—0—0—0—4—0—0—1 0 50 100 150 200 250 300 350 400 450 500 550 600 QUANTITY (Phones) ...
Screen Shot 2022-10-30 at 2.45.11 PM.png

Image transcription text

Complete the following table with the tax revenue collected and deadweight loss caused by each of the tax proposals. Tax Revenue Deadweight Loss If the Government Taxes... (Dollars) (Dollars) Leather jackets at $100 perjacket Smartphones at $100 per phone Suppose the government wants to tax the good that will generate more tax revenue at a lower welfare cost. In this case, it should tax V because, all else held constant, taxing a good with a relatively V elastic demand generates larger tax revenue and smaller deadweight loss. ...

 

Answer & Explanation

Solved by verified expert
Answered by Nellybella on coursehero.com
<p> </p><p>sectetur adipiscing</p><p> </p><p><u>sectetur adipi</u></p><p><strong>sectetur adipiscing</strong></p><p><strong>sectetur ad</strong></p><p> </p><p><u>sectetur adipisci</u></p><p><strong>sectetur adipiscing</strong></p><p><strong>sectetur a</strong></p><p> </p><p> </p><p>sectetur adipi<strong><u>sectetur adi</u></strong>sectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. P<strong><u>sectet</u></strong>sectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pe</p><p> </p><p> </p><p> </p>
CliffsNotes Logo

Unlock access to this and over
10,000 step-by-step explanations

Unlock Explanation

Have an account? Log In

Step-by-step explanation

<p>se</p><p><u>sectetur adipi</u></p><p>sectetur adipiscing elit. Nam lacinia pulvi</p><p>sectetur adipiscing</p><p><strong>sectetur adipiscing</strong></p><p>sectetur adipiscing elit.</p><p>sectetur adipis</p><p><strong>sectetur ad</strong></p><p><img src="/qa/attachment/36718829/" alt="36718829"/></p><p>se</p><p><u>sectetur adipisci</u></p><p>sectetur adipiscing elit. Nam lacinia pulvi</p><p>sectetur adipiscing</p><p><strong>sectetur adipiscing</strong></p><p>sectetur adipiscing elit.</p><p>sectetur adipi</p><p><strong>sectetur a</strong></p><p> </p><p><img src="/qa/attachment/36718830/" alt="36718830"/></p><p> </p><p> </p><p>se</p><p>sectetur adipi<strong><u>sectetur adi</u></strong>sectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. P<strong><u>sectet</u></strong>sectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pe</p><p> </p><p> </p><p> </p>
2 attachments
Subscribe to unlock attachment
PNG
Subscribe to unlock attachment
PNG

Get unstuck with a CliffsNotes subscription

Example CliffsNotes Question and Answer
Unlock every step-by-step explanation, download literature note PDFs, plus more.Get Access

Related Q&A