Figure 18-3 -Refer to Figure 18-3. the Figure Above Shows a Demand

question 161

Essay

Figure 18-3
-Refer to Figure 18-3. The figure above shows a demand curve and two supply curves, one more elastic than the other. Use Figure 18-3 to answer the following questions.
a. Suppose the government imposes an excise tax of $1.00 on every unit sold. Use the graph to illustrate the impact of this tax when the supply curve is S₁ and when the supply curve is S₂.
b. If the government imposes an excise tax of $1.00 on every unit sold, will the consumer pay more of the tax if the supply curve is S₁ or S₂? Refer to the graphs in your answer.
c. If an excise tax of $1.00 on every unit sold is imposed, will the revenue collected by the government be greater if the supply curve is S₁ or S₂?
d. If the government imposes an excise tax of $1.00 on every unit sold, will the deadweight loss be greater if the supply curve is S₁ or S₂?

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Definitions:

RUPA Partnership Test

The criteria established under the Revised Uniform Partnership Act to determine the existence of a partnership, focusing on the intention to carry on as co-owners of a business for profit.

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A nascent company aiming to fill a gap in the market and rapidly grow in terms of customers and revenues.

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The state of being legally responsible for something, typically referring to the obligation to compensate others for loss or damage caused by one’s actions.

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