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lbelcher lbelcher
wrote...
Posts: 344
A week ago

Question 1.

If the government wants to minimize the welfare loss of a tax, it should tax goods with more inelastic demands or supplies.



▸ true

▸ false

Question 2.

Suppose the equilibrium price and quantity of a 12-pack of Dr. Pepper are $5.00 and 10,000 12-packs, respectively, and the government decides to impose a $1.00 tax on every 12-pack of carbonated soft drinks. Draw two supply and demand graphs, one showing the excess burden of the tax when supply is less elastic and the other showing the excess burden of the tax when supply is more elastic. Identify the excess burden of the tax on each graph. On which graph is the excess burden the greatest?

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cooldawg69cooldawg69
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Posts: 305
A week ago
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Answer 1

true

Answer 2




The excess burden of the tax is represented by area A + B on each graph, and is greatest when supply is more elastic.

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