#36. Suppose sellers of perfume are required to send $1.00 to the government for
ID: 1189952 • Letter: #
Question
#36. Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?
a.
The effective price received by sellers is $0.40 per bottle less than it was before the tax.
b.
Sixty percent of the burden of the tax falls on sellers.
c.
This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume.
d.
All of the above are correct.
#37. When a tax is placed on the buyers of lemonade, the
a.
sellers bear the entire burden of the tax.
b.
buyers bear the entire burden of the tax.
c.
burden of the tax will be always be equally divided between the buyers and the sellers.
d.
burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.
Figure 1-3
The vertical distance between points A and B represents the tax in the market.
#38. Refer to Figure 1-3. The price that buyers pay after the tax is imposed is
a.
$8.
b.
$10.
c.
$16.
d.
$24.
#39. Refer to Figure 1-3. The effective price that sellers receive after the tax is imposed is
a.
$6.
b.
$10.
c.
$16.
d.
$24.
#40. Refer to Figure 1-3. The amount of the tax per unit is
a.
$6.
b.
$8.
c.
$14.
d.
$18.
#41. True/False - The tax burden falls more heavily on the side of the market that is more inelastic.
#42. True/False - Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.
a.
The effective price received by sellers is $0.40 per bottle less than it was before the tax.
b.
Sixty percent of the burden of the tax falls on sellers.
c.
This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume.
d.
All of the above are correct.
Explanation / Answer
Ans:
#36) a. The effective price received by sellers is $0.40 per bottle less than it was before the tax.
#37) d. burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.
#38. 39, 40 Refer to Figure 1-3 is not available in the question
#41) False
#42) True
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.