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

Moving expenses deductable?, Just moved out of state. My husband works 3 pa...

Just moved out of state. My husband works 3 part time jobs instead of one full time job. Can we deduct our moving expenses?

Which are the allowances are exempted from the income tax, Q. Which are the...

Q. Which are the allowances are exempted from the income tax? Ans: 1. Uniform Allowance and Sumptuary Allowance 2. Death cum Retirement gratuity received by Government

Calculate income tax for company, Microrax Company earned before-tax income...

Microrax Company earned before-tax income of $960,000 for its 2013 fiscal year. During the year the company experienced a $605,000 loss from earthquake damage that it considered to

Determine the maximum cca , Lambda Ventures, an unincorporated business, ha...

Lambda Ventures, an unincorporated business, has a class 10 UCC balance on January 1, 2010 of $453,000.During 2010, it acquires additional Class 10 assets at a cost of $63,200.Also

Disregard the alternative minimum tax, Dan and Cheryl are married, file a j...

Dan and Cheryl are married, file a joint return, and have no children. Dan is a pharmaceutical salesman and Cheryl is a nurse at a local hospital. Dan%u2019s SSN is 400-20-1000 and

What reasons would a government introduce a tax, Question 1: "The legit...

Question 1: "The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do at all, or cannot so well do, for themselves

1040 problem, Amy R. and David T. Smith are married and live at 123 Main St...

Amy R. and David T. Smith are married and live at 123 Main Street, Stafford, VA 22554. Dave is self-employed as a web developer and Amy is a commercial refrigeration sales represen

Marginal tax bracket, Maskot Industries wishes to determine whether it woul...

Maskot Industries wishes to determine whether it would be advisable to replace an existing, fully depreciated machine with a new piece of equipment. The new machine will cost $300,

Corporate Taxation, do you offer tutoring services for graduate accounting ...

do you offer tutoring services for graduate accounting students?

Goods and services tax, William Potter is a plumber currently operating as ...

William Potter is a plumber currently operating as a Sole Trader in Levin. William has approached you, a tax accountant, for your advice on certain tax matters. William's brothe

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