What happens to the budget line if the government applies a specific tax of $1 per gallon of gasoline but does not tax other goods (assuming that the consumer will still buy more than 10 gallons per week)? What happens to the budget line if the tax applies only to purchases of gasoline in excess of 10 gallons per week? 1.) Use the line drawing tool to draw a new budget constraint with the gasoline tax on all gallons of gasoline. Label this line 'L2 2.) Use the multipoint curve drawing tool to draw the new budget constraint when the gasoline tax applies only to purchase of gasoline in excess of 10 gallons per week. Label this line 'L3 (Note: Be sure to draw the entire budget constraint starting at a quantity of 0). Carefully follow the instructions above, and only draw the required objects All other goods, Units per week 10 Gasoline, Gallons per week

What happens to the budget line if the government applies a specific tax of $1 per gallon of gasoline but does not tax other goods (assuming that the consumer will still buy more than 10 gallons per week)? What happens to the budget line if the tax applies only to purchases of gasoline in excess of 10 gallons per week? 1.) Use the line drawing tool to draw a new budget constraint with the gasoline tax on all gallons of gasoline. Label this line 'L2 2.) Use the multipoint curve drawing tool to draw the new budget constraint when the gasoline tax applies only to purchase of gasoline in excess of 10 gallons per week. Label this line 'L3 (Note: Be sure to draw the entire budget constraint starting at a quantity of 0). Carefully follow the instructions above, and only draw the required objects All other goods, Units per week 10 Gasoline, Gallons per week

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume we are measuring coffee on the horizontal axis and flowers on the vertical axis. The government introduces a tax on coffee consumed beyond C* units. What will happen to the budget constraint? O The budget constraint will become kinked at C* units of coffee and will have a flatter slope at units beyond C*. O The budget constraint will pivot inwards around the horizontal intercept. O The budget constraint will pivot outwards around the vertical intercept. O The budget constraint will shift outwards and become steeper. O The budget constraint will become kinked at C* units of coffee and will have a steeper slope at units beyond C*. O No answer.
Suppose the demand curve for butter is Q = 50 − 3P and the supply curve isQ = 2P. Suppose the government announces a per-unit tax of 1 on the priceof butter. Tax on butter can be seen as a ’fat tax’. What is the overall effectof a fat tax on the consumers? pls explain by drawing a diagram
301 15 Assume we are measuring coffee on the horizontal axis and flowers on the vertical axis. The government introduces a tax on coffee consumed beyond C units. What will happen to the budget constraint? O The budget constraint will become kinked at C* units of coffee and will have O The budget constraint will pivot inwards around the horizontal intercept. O The budget constraint will pivot outwards around the vertical intercept. O The budget constraint will shift outwards and become steeper. O The budget constraint will become kinked at C* units of coffee and will have O No answer. flatter slope at units beyond Cº. steeper slope at units beyond C.
2. "To achieve an efficient allocation, lump-sum taxes on consumers' endowments and per-unit taxes on the prices of goods are equivalent." Do you agree with this assertion? Explain using the welfare theorems in your argu- ments.
Econimic The indifferent curve of consumers have the usual shape with diminishing marginal rate of substitution between the two goods. Suppose the government must raise tax revenue of R and can do this either imposing a per unit tax of t on good A or by imposing a lumpsum tax T on each consumer. Which policy would consumers preferL Explain your reasoning in detail using appropriate diagram. Explain the justification behind your result.
1. Determine the amount of consumer surplus generated in each of the following situations William goes to the clothing store to buy a new T-shirt, for which he is willing to pay up to $10. He picks out one he likes with a price tag of exactly $10. At the cash register, he is told that his T-shirt is on sale for half the posted price. b. Sophia goes to the CD store hoping to find a used copy of the Eagles Greatest Hits for up to $10. The store has one copy selling for $10 c. After baseball practice, Nicholas is willing to pay $2 for a bottle of mineral water. The 7-Eleven sells mineral water for $2.25 a bottle. а.
The government of Freeland is considering introducing a carbon tax to tackle global warming. They have asked for your help in analyzing the impact. They give you the following information. The average person in Freeland eans €30 a week. She spends it on a carbon good and on all other goods. Her preferences satisfy the usual assumptions of consumer choice theory. The carbon good currently costs €2 a unit and the average person buys 5 units of a carbon good per week. The government is considering putting a tax of €1 on carbon and giving a transfer of €5 to the average person to compensate her for the price increase. Will this proposal make the average consumer better off, worse off or the same as they were before the proposal? Explain clearly. Will this proposal lead to any change in the amount of the carbon good bought by the average consumer? Explain clearly.
1. (a) Which causes a shortage of a good--- a price ceiling or a price floor? Justify your answer with a graph. (b) What is a budget constraint? A consumer has an income of $3000. Soda costs $3 per liter and cheese costs $6 per pound. Draw the consumer's budget constraint with soda on the vertical axis. What is the slope of this budget constraint?
Problem 1: Wendy drinks 01 sugary drinks and 4smoothies a wek. Smoothies are $5 each and sugary drinks were $2 each. This week, things are different: the government has slapped a tax on sugary drinks and their price has doubled ot $4. But it's not all bad news for Wendy. The government has also revised the income tax, so Wendy's drinks budget has increased. She can now just afford to buy her usual 01 sugary drinks and 4smoothies a week.a. What was Wendy's drinks (sugary drinks and smoothies) budget last week and what is it this week.b. What was Wendy's opportunity cost of a sugary drink last week and what is ti this week?c. Does Wendy buy 10 sugary drinks and 4smoothies this week? Explain.d. Draw Wendy's budget line for drinks for last week by taking smoothies on vertical axis and sugary drinks on horizontal axis. What is the slop of budget line?.e Draw Wendy's budget line for drinks for this week on the same graph. How the new budget line si different from the old one.Problem 2: a.…
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6. Provide a detailed analysis of the Second Welfare Theorem of Economics
o Welfare and Efficiency — End of Chapter Problem Suppose the daily demand curve for gasoline is as provided in the accompanying graph. a. Calculate the consumer surplus in the market for gasoline if the market price is $3.50. Consumer surplus : = $ million b. Now suppose the price decreases to $2.50 per gallon. Move the price line on the graph to reflect this change, then calculate the new consumer surplus. New consumer surplus = $ million Price ($ per gallon) 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 O Price Demand 40 80 120 160 200 240 280 320 360 400 440 480 520 Quantity of gasoline (millions of gallons)