ECON 201 Lecture Notes - Lecture 13: Demand Curve

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pinkturtle125

14 Nov 2016

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When the government imposes a tax on sellers, this effectively shifts the supply curve up by that amount. Seller gets price and tax minus the tax. Government imposes a tax on sellers (usual approach) When the price is set, seller will sell what it will sell when price is price plus tax minus the tax. When the supply curve shifts up, supply is decreasing. Consumer pays price plus tax plus another tax. Demand curve shifts down by the tax. In the previous examples, the price paid by buyers is . 30 regardless of who the tax is charged to. The price earned by sellers is . 80, also regardless of who the tax is charged to. I(cid:374) ge(cid:374)eral, it does(cid:374) t (cid:373)ake a differe(cid:374)(cid:272)e whether a ta(cid:454) is assessed o(cid:374) (cid:271)u(cid:455)ers or sellers.

Related Questions

Please explain/prove your answers. Are the following statements true or false?

A. A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

B. If the government places a $2 tax in the market, the seller bears $2 of the tax burden.

C. Buyers and sellers rarely share the burden of a tax equally.

D. When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

E. If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

jadeeel186

52) Suppose that a tax of 8 dollars per tuba is placed on this market. As a result the supply curve expressed as a function of the price paid by the buyers shifts up by 8 dollars, and its equation is T = P - 18. At the new equilibrium the price paid by the buyers and the price received by the sellers will be: A) 26, 18 B) 30,22 C) 16,8 D) 42, 36 E) 20, 12

26. Consumption (household sector) spending is the largest component of

	Aggregate employment
	Aggregate demand
	Aggregate supply
	Aggregate income
	Aggregate output

27. The aggregate demand curve slopes down, because of the inverse relationship between the price level and real output (GDP).

	True
	False

28. What happens to the aggregate supply curve when the government imposes an excise tax on production?

	Increases by more than the tax
	Remains the same
	Shifts to the right
	reaches a neutral point
	Shifts to the left

29. Suppose National Bank has required reserves of $1,000 and actual reserves of $5,000. National Bank' s lending ability is___________.

	$6,000
	$1,000
	$2,000
	$5,000
	$4,000

30. A decrease in the per-unit cost will shift the aggregate supply curve

	Middle ward
	Leftward
	Will not shift the curve
	Downward to the right
	Rightward

yellowantelope974

ECON 201 Lecture Notes - Lecture 13: Demand Curve

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