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Unformatted text preview: out-of-State firms are out-of-State residents as well. Describe the net gains and losses to residents in the State from this tax on alcohol? 4) What if the tax rate were now doubled? Show on a graph the resulting changes in prices, quantity consumed, welfare of consumers and producers, tax revenue, and the excess burden? 5) In each case, how do the changes described in question 4 compare in size to those described in question 2? For example, if they are equal, then the overall changes would be twice as large if the tax rate were twice as high. Are they? Does tax revenue, for example, necessarily increase? Why? 6) How else might the utility of individuals, and government revenue, be affected by this tax increase? Why? Demand Supply...
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- Winter '08