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Economics 12th Edition by William Baumol, Alan S Blinder
Edition 12ISBN: 978-0538453691Economics 12th Edition by William Baumol, Alan S Blinder
Edition 12ISBN: 978-0538453691 Exercise 7
Consider the market for beef discussed in this chapter (Tables 1 through 3 and Figures 1 and 8). Suppose that the government decides to fight cholesterol by levying a tax of 50 cents per pound on sales of beef. Follow these steps to analyze the effects of the tax:
a. Construct the new supply schedule (to replace Table 2) that relates quantity supplied to the price that consumers pay.
b. Graph the new supply curve constructed in Test Yourself Question 7(a) on the supply-demand diagram depicted in Figure 7.
c. Does the tax succeed in its goal of reducing the consumption of beef
d. Is the price rise greater than, equal to, or less than the 50 cent tax
e. Who actually pays the tax, consumers or producers (This may be a good question to discuss in class.)
a. Construct the new supply schedule (to replace Table 2) that relates quantity supplied to the price that consumers pay.
b. Graph the new supply curve constructed in Test Yourself Question 7(a) on the supply-demand diagram depicted in Figure 7.
c. Does the tax succeed in its goal of reducing the consumption of beef
d. Is the price rise greater than, equal to, or less than the 50 cent tax
e. Who actually pays the tax, consumers or producers (This may be a good question to discuss in class.)
Explanation
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(a) The supply schedule represents chang...
Economics 12th Edition by William Baumol, Alan S Blinder
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