Ex3Monday

Ex3Monday - C Will reduce price received by sellers by less than amount of the tax D Will increase price paid to sellers Vertical supply case

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
How do you travel to the university? A) Walk B) Bicycle C) Public Transportation D) Car E) Other
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The effect of a sales tax collected from buyers is to A) Shift the demand curve up. B) Shift the supply curve down. C) Shift the demand curve down. D) Shift the supply curve up. E) Shift both the demand and the supply curve.
Background image of page 2
And on to our lecture…
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The effect of a sales tax collected from sellers is to A) Shift the demand curve up. B) Shift the supply curve down. C) Shift the demand curve down. D) Shift the supply curve up. E) Shift both the demand and the supply curve.
Background image of page 4
If the demand curve slopes down and the supply curve is vertical, a sales tax collected from buyers A) Not change the price paid to sellers. B) Will reduce price received by sellers by the amount of the tax.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 8
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: C) Will reduce price received by sellers by less than amount of the tax. D) Will increase price paid to sellers. Vertical supply case quantity price Pretax price Post tax Demand curve shifts down The Demand curve has equation Q=100-P. Supply curve has equation Q=10+2P. A sales tax of $15 is introduced. The after-tax price to demanders will 1. Rise by $5 2. Rise by $7.50. 3. Rise by $15. 4. Rise by $10 5. There is not enough information to tell. Why is that? Let x be the rise in buyer’s after-tax price and y the fall in supplier’s after-tax price. We know that supply curve is twice as steep as the demand curve so y=2x. We also know that x+y=$15 is total amount of the tax. So x+2x=$15. Therefore x=$5....
View Full Document

This note was uploaded on 12/25/2011 for the course ECON 1 taught by Professor Bergstrom during the Fall '07 term at UCSB.

Page1 / 8

Ex3Monday - C Will reduce price received by sellers by less than amount of the tax D Will increase price paid to sellers Vertical supply case

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online