of 350 is imposed by government some producers and consumers no longer

Of 350 is imposed by government some producers and

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the tax. That amount ofrevenue equals ($4.90 -$3.90) x 3.7 = $3.7 billion. Consumers pay a price of $3.08, which is an 8-cent increase in price from the $3.00 equilibrium price. Producers receive $3.08 from consumers, pay 10 cents to the government, and keep $2.98 per pack. The demand curve represents employers.
114 CHAPTER 4 42 b 43 d Economic Efficiency, Government Price Setting, and Taxes Supply represents workers. When workers are assessed a tax, the supply curve shifts to the left. It does not matter who pays the tax to the government, the tax incidence will remain the same. Short Answer Responses 1. Opponents of the minimum wage argue that raising the minimum wage will reduce employment, especially among workers with the least skills. An alternative policy is the earned income tax credit. Workers who do not owe any federal taxes receive payments from the federal government. This program increases the incomes of low-skilled workers without the risk of increasing unemployment. Despite these arguments against the minimum wage and the clear evidence from positive economic analysis that a higher minimum wage reduces employment, a few economists still favor raising the minimum wage. They base their argument on normative economics. First, they believe the benefits of higher wages to those still employed outweigh the costs to those thrown into unemployment. This is a value judgment; you are free to agree or disagree. Second, they argue that many low-income workers miss the earned income tax credit because they don't file tax returns. 2. Because cigarettes are addictive many smokers will pay higher prices for cigarettes rather than reduce the quantity they purchase. This results in greater government revenue from the cigarette taxes. Taxes on cigarettes and alcohol (often called "sin taxes") do not affect as many people

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