».ooo Sprint T 8:57 AM 100% courses.aplia.com Elasticity of Demand and Supply Gr
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».ooo Sprint T 8:57 AM 100% courses.aplia.com Elasticity of Demand and Supply Graded Assignment |Read Chapter 5 | Back to Assignment Due Sunday 04.24.16 at 11:00 PM Attempts: Keep the Highest: /3 9. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes when the tax on sellers is set at $0 per pain Suppose the government institutes a tax of $20.30 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then, enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Shoes 100 90 80 O 70 2 60 CU 50 40 30 20 Quantit (Pairs of shoes) 10 Supply Demand Price (Dollars per pair) Supply Price (Dollars per pair) 0.00 Supply Shifter Demand Tax on Sellers (Dollars per pair) 0.00 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Pairs of shoes) Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity (Pairs of shoes) Price Buyers Pay (Dollars per pair) Price Sellers Receive (Dollars per pair) Before Tax After Tax Using the data you entered in the previous table, calculate the tax burden that falls on buyers and sellers, respectively, and calculate the price elasticity of demand and supply throughout the relevant ranges using the midpoint method. Enter your results in the following table. Tax Burden (Dollars per pair) Elasticity Buyers Sellers The burden of the tax falls more heavily on the elastic side of the market. Session 59:45 Timeout Grade It Now Save & Conti SessionExplanation / Answer
2) 3) The increase in the Govt. spending has increased the levl of employment, aggregate income and thereby shifting the AD curve to the right, which in turn has increased the price.
Total
Revenue
$
Draw the relevant graph using the above values given in the table.
Price Ed= 1.5(approx)
Elastic Increase in TR
Elastic.
1) 2)
Tax Burden Buyers $16 Elastic demand
Tax Burden Sellers $4.30 Inelastic supply.
The burden of the tax falls more heavily
on the (demand side)
Price in $ QtyTotal
Revenue
$
45 3 135 40 6 240 35 9 315 30 12 360 25 15 375 20 18 360 15 21 315 10 24 240 5 27 135Related Questions
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