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Questions and Answers
What is the equilibrium price before the tax is imposed?
What is the equilibrium price before the tax is imposed?
- $20
- $10
- $15 (correct)
- $5
How does a 1.5% tax per unit affect the equilibrium quantity?
How does a 1.5% tax per unit affect the equilibrium quantity?
- It has no effect on quantity.
- It increases the quantity supplied.
- It decreases the quantity demanded. (correct)
- It increases the quantity demanded.
What is the formula used to calculate tax revenue received by the government?
What is the formula used to calculate tax revenue received by the government?
- Equilibrium Price × Tax Rate
- Tax Rate × Demand Price
- Tax Rate × Supply Price
- Tax Rate × Equilibrium Quantity (correct)
What effect does the tax have on the equilibrium price after it is imposed?
What effect does the tax have on the equilibrium price after it is imposed?
What graphical feature indicates equilibrium in a demand and supply graph?
What graphical feature indicates equilibrium in a demand and supply graph?
Flashcards
Equilibrium
Equilibrium
The point at which the quantity supplied and the quantity demanded for a good are equal. It represents a state of balance in the market for that good.
Elastic Demand
Elastic Demand
When a price change causes a relatively large change in the quantity demanded. This is indicated by a steep demand curve slope.
Inelastic Demand
Inelastic Demand
When a price change causes a relatively small change in the quantity demanded. This is indicated by a flat demand curve slope.
Per Unit Tax
Per Unit Tax
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Tax Revenue
Tax Revenue
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