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Part 4 - Put It All Together- The graphs below show the markets for pizza and movies. Each market is subject to the same $3
Part 4 - Put It All Together- The graphs below show the markets for pizza and movies. Each market is subject to the same $3 per unit excise tax. Answer the questions. Market for Pizza Price $15 STAX Supply $14 Supply 512 $111 Demand $10.... SO Quantity 10 12 14 Quantity 14. How much total tax revenue will the government earn by taxing movies? Show your work. 15. How much total tax revenue will the government earn by taxing pizza? Show your work. 16. Explain why the tax on movies generates more revenue for the government than the same tax on pizza. 17. When the tax is placed on movies, how much of the total tax revenue is paid by consumers? How much is paid by producers? 18. When the tax is placed on pizza, how much of the total tax revenue is paid by consumers? How much is paid by producers? 19. Which causes more deadweight loss, a tax on movies or a tax Price Demand on pizza? Explain. $15 ....... STAX $14 Supply $13 Part 5 - Stretch Your Thinking- Assume instead that the demand for movies is perfectly inelastic and as shown on the $12..... graph to the right. Answer the following questions. $11 20. How much of the total tax revenue is paid by consumers? $10 21. How much is paid by producers? $9
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