Use appropriate graphs and provide clear explanation ( using relevant economic t

Question

Use appropriate graphs and provide clear explanation ( using relevant economic theories and discussions ) for the likely economic impact of each case. please give complete and concise answer to each question:

A. Imposition of sales tax to reduce consumption of tobacco among those who are heavily addicted to use of tobacco.

B. Imposition a sales tax on purchase of luxury products.

C. Providing subsidy to buyers of solar power to increase use of non-fossil based energy.

D.putting a heavy sales tax on use of gas and using the revenue to subsidizer production electric cars.

Explanation / Answer

A. Since the people are heavily addicted to tobacco, an increase in tax will not affect their consumption levels. hence, demand curve remains at the original level.

B. Luxury products face an elastic demand curve. hence, with an increase in tax, the price will increase which will lead to a fall in demand

C.Provision of a subsidy will shift the supply curve to the right , as the cost of production of solar power reduces for the producers.

D. Putting a heavy tax on gas will decrease the demand of gas and gas driven cars. An increase in subsidy for electric cars will reduce the cost of production of electric cars and increase their production. Hence , the supply curve wouls shift to the right for electric cars.

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.