The government wants to discourage the consumption of sugary drinks and proposes introducing a 20 percent...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The government wants to discourage the consumption of sugary drinks and proposes introducing a 20 percent tax on them. A survey shows that the demand for sugary drinks is perfectly elastic and people are equally happy to stop consuming those drinks and switch to healthier alternatives. Producers of sugary drinks complain and say they will increase their prices by 20 percent. Price (dollars per case) 7- Explain and illustrate with a graph, why sugary drinks producers are wrong. 6- The graph shows the supply curve for sugary drinks. 5- The demand for sugary drinks is perfectly elastic. Draw the demand curve for sugary drinks when the market price is $6 a case. 4- Now the government imposes a $1 tax on a case of sugary drinks. Draw a point to show the price paid by buyers and the quantity purchased. 3- 8 Quantity (millions of cases per year) 10 When the government imposes the 20 percent tax on sugary drinks, sellers raise the price by 20 percent and >>> Draw only the objects specified in the question. O A. can't; sellers pay all of the tax O B. can; buyers pay all of the tax O C. don't; buyers pay some of the tax and sellers pay the rest of the tax O D. can; the tax is split equally between buyers and sellers The government wants to discourage the consumption of sugary drinks and proposes introducing a 20 percent tax on them. A survey shows that the demand for sugary drinks is perfectly elastic and people are equally happy to stop consuming those drinks and switch to healthier alternatives. Producers of sugary drinks complain and say they will increase their prices by 20 percent. Price (dollars per case) 7- Explain and illustrate with a graph, why sugary drinks producers are wrong. 6- The graph shows the supply curve for sugary drinks. 5- The demand for sugary drinks is perfectly elastic. Draw the demand curve for sugary drinks when the market price is $6 a case. 4- Now the government imposes a $1 tax on a case of sugary drinks. Draw a point to show the price paid by buyers and the quantity purchased. 3- 8 Quantity (millions of cases per year) 10 When the government imposes the 20 percent tax on sugary drinks, sellers raise the price by 20 percent and >>> Draw only the objects specified in the question. O A. can't; sellers pay all of the tax O B. can; buyers pay all of the tax O C. don't; buyers pay some of the tax and sellers pay the rest of the tax O D. can; the tax is split equally between buyers and sellers
Expert Answer:
Answer rating: 100% (QA)
Solution The incidence of tax is determined by the relative elasticities of demand and supply In thi... View the full answer
Related Book For
Posted Date:
Students also viewed these economics questions
-
The government wants to drive the price of soybeans above the equilibrium price, p1, to p2. It offers growers a payment of x to reduce their output from Q1 (the equilibrium level) to Q2, which is the...
-
The government wants to reduce white-collar crime. a. Suppose for the moment innocent people are never wrongly convicted of a crime. Explain why the Becker model of crime and punishment suggests that...
-
The government wants to encourage individuals on welfare to become employed. It is considering two possible incentive programs: a. Give firms $2 per hour for every individual on welfare who is hired....
-
A stock is trading at $70. You believe there is a 70% chance the price of the stock will increase by 10% over the next 3 months. You believe there is a 10% chance the stock will drop by 10%, and you...
-
After Commuter Airlines was forced into bankruptcy, the companys stockholders brought suit against Thomas & Ross, the companys independent auditors. Three independent assumptions concerning this...
-
When Davidson Masonry and Lafayette entered an agreement to work together, what kind of special business form was created? Explain. Marilyn Rowe, decided to submit a bid for a decorative concrete...
-
Which of the following is the most accurate cost driver for quality costs? a. Inspection hours b. Number of units produced c. Labour hours d. Machine hours
-
Cash budgetcomprehensive Following are the budgeted income statements for the second quarter of 2013 for SeaTech, Inc.: * Includes all product costs (i.e., direct materials, direct labor, and...
-
Find the standard deviation of this probability distribution. Use your mean rounded to 2 decimal plac Give your answer to 2 decimal places. 0 0.15 1 0.15 2 3 0.2 0.5 C
-
Grant and Debbie enter into a contract binding Grant personally to do some delicate cabinetwork. Grant assigns his rights and delegates performance of his duties to Clarence. (a) On being informed of...
-
Can you do 5-step action plan similar to the information found in Center on Developing Child: 5 Steps for Brain-Building Serve and Return. Can you identify the scenario of going to a science museum....
-
Describe at least three exchange rate factors that are likely to attract foreign investors to a country's currency. Explain why these factors are attractive for foreign investors.
-
If your car gets 32 mpg how many gallons of gas would be used for a 250 mile trip?
-
How do we envisage fostering a culture of strategic foresight and adaptability, enabling proactive responses to emergent challenges and opportunities
-
Find an article published in an academic journal that addresses some research topic using statistical analysis. Access the TAMUC library by following the "Library" link on the menu on the left-hand...
-
Conduct a web search and identify one (1) site dedicated to topics such as learning statistics quantitative business practices in your industry or industry of interest (consider professional...
-
In 2021, Professor Patricia (Patty) Pt retired from the Palm Springs Culinary Arts Academy (PSCAA). She is a single taxpayer and is 62 years old. Patty lives at 98 Colander Street, Apt. 206D,...
-
If 2 5 9 - k 5 8 = 2 5 8 , what is the value of k?
-
Say the government establishes rights to pollute so that without a pollution permit you aren't allowed to emit pollutants into the air, water, or soil. Firms are allowed to buy and sell these rights....
-
What are three ways in which the institutions of developing countries differ from those in developed countries?
-
A Wall Street Journal article, "As Fear of Deficits Falls, Some See a Larger Threat," describes the following threat of a high U.S. budget deficit: The investors who finance our deficits by buying...
-
Name the various components of a measurement system.
-
Kemico Ltd manufactures a variety of chemicals which it supplies in bulk to industrial customers. Its factory at Gritborough employs 50 people, and its annual turnover in 1995 was 7.5M. During 1995,...
-
Define the term measurement.
Study smarter with the SolutionInn App