Calculate the market price, Taxation

Assignment Help:

In an effort to reduce alcohol consumption, the government is considering a $1 tax on each gallon of liquor sold (the tax is levied on producers). Suppose that the supply curve for liquor is upward sloping and its equation is  Q = 30,000P (where Q is the number of gallons of liquor and P is the price per gallon). The demand curve for liquor is Q 500,000 - 20,000P.

a.  Calculate the market price, the price paid by consumers, and the price received by sellers, before and after the tax is levied.

b.  Calculate the elasticities of demand and supply at the pre-tax equilibrium price and quantity and relate these elasticity numbers (qualitatively) to your findings in part (a).

c.  From part (a) (and the change in quantity) calculate the change in consumer surplus and the change in producer surplus resulting from the tax.

d.  How much revenue does the tax raise? How might the researcher allocate these revenues when analyzing the incidence of the tax burden?

Read the paper by Ruggeri and Bourgeois (2009) posted on Blackboard. They note that a carbon tax affects carbon emissions by changing the prices of the taxed fuels relative to prices of all other goods and services in the economy, thus providing an incentive for reducing the consumption of carbon-based fuels. This shift in prices has implications for the distribution of the tax burden across individuals in the economy. In particular, this shift takes place at three levels: (1) fuels used in electricity generation; (2) energy used by the industrial-commercial sector; and (3) energy used directly by the final consumer (the residential and public administration sectors). Summarize the authors' analysis of the shifting of tax burdens that occurs across each of these three broad levels of the economy. 

6.  What is meant by the "retail sector" of an economy? The article by Bird and Smart on tax incidence notes that a large portion of Provincial Retail Sales Taxes in Canada are in fact paid on business inputs, such as cars, tools, groceries for restaurants, etc.). In other words, many producers have to pay the RST. Use a demand and supply diagram to analyze the impact of the portion of the RST being levied on producers. Draw your diagram in such a way as to represent the authors' findings about the tax incidence of the RST paid on business inputs.


Related Discussions:- Calculate the market price

Accounting for pension, Cecil C. Seymour is a 646-year-old widower. He had ...

Cecil C. Seymour is a 646-year-old widower. He had income for 2013 as follows: Pension from former employer $39,850, Interest income from Alto Nationl Bank 5,500, Interest inco

Wct, How to raise an invoice with WCT for Civil construction job

How to raise an invoice with WCT for Civil construction job

Income tax return, "The $3,600 of property taxes for the house were prorate...

"The $3,600 of property taxes for the house were prorated with $1,950 being apportioned to the seller and $1,650 being apportioned to the buyer. In December of the current year the

Service tax, there is significant difference between the average service ta...

there is significant difference between the average service tax collection per assessee in Pune zone and the average service tax collection per assessee in the country

Calculate the amount of tax expense, Given the below information, calculate...

Given the below information, calculate the amount of tax expense.  Assume taxes are paid immediately (with  cash). Note: the statutory rate is assumed to be 35%. You will have t

Find out debt to remain constant, Use the information provided in question ...

Use the information provided in question 4 to answer this question. a) What must happen to taxes in year t for the primary deficit to be zero? b) What must happen to taxes in y

Beneficial for gencorps shareholders, In May 2003, Gencorp acquired Sequa C...

In May 2003, Gencorp acquired Sequa Corp.'s propulsion subsidiary ARC for $133million in cash and $11 million in transactions costs. Table below lists selected information about

How much net income, Guay Corp a start up company provided services that we...

Guay Corp a start up company provided services that were acceptable to its customers and billed those customers for $350,000 in 2012. However, Guay collected only $280,000 cash in

Explain expatriation tax, An expatriation tax is a tax on somebody who give...

An expatriation tax is a tax on somebody who gives up their citizenship. In United States, the expatriation tax provisions under Section 877 and Section 877A of the Internal Revenu

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd