The supply of generic cheese sandwiches is perfectly elastic, the demand for generic cheese sandwiches is unit elastic, and with no tax on generic cheese sandwiches, the price is $1 million and 240 generic cheese sandwiches a week are bought. Now generic cheese sandwiches are taxed at 20 percent. Discuss tax incidence, tax revenue, and the efficiency of this tax. Explain with words + graph.

 

The requirement is defined as flexibility when the firmness of the computer is greater than 1, indicating a high response to price fluctuations. Combined elasticity less than 1 indicates a low response to price changes and is defined as inelastic demand. The cohesive stretch indicates a balanced response to demand. In other words, the percentage change in the required quantity is equal to the change in percentage value, so the intensity is equal to 1. These categories are summarized in

Step-by-step explanation

Solution:

The tax burden falls sharply on the upper emelastic side. This is because the higher tightness indicates that the lower price will change, the price will change more and the small price increase will change the value so much that the price effect will be dominated by the output effect.

Tax conditions are simply a distribution of the tax burden between buyers and sellers, and if the extension is fully expanded, the entire tax burden will fall on consumers, regardless of who the tax is applied to.

With taxes, any curves will go left. By taking the required cash shifts, the tax revenue can simply be the new exchange rate * the tax value at the new value.

Taxes have never been as efficient (or any existing government policy such as subsidy or quota as well) as it will always produce weight loss. Total surplus = consumer surplus + producer surplus + government revenue. Prior to taxation, government revenue is 0 but residual value has been increased. With taxes, producer surplus consumer residual + decreases enough to be covered by an increase in tax revenue, creating a residual value less than the original total surplus. This difference is a decrease in dead weight (the first part of the residue that did not go to anyone in the market), thus deviating from efficiency.

Table 1. Three Stages of Extension: Strength, Strength, and Unity

If. . . After that. . . And It's Called. . .

% change in quantity>% change in values ??of Computed Elasticity> 1 Elastic

% quantity change =% price change Computer enhancement = 1 Unitary

% change in quantity <% change in price Combined durability <1 Inelastic

It is important to note that both elastic and inelastic are related terms, as shown in Figure 1, below. As a person lowers the desired curve from top left to bottom right, the average stiffness is much greater than one (very stretchy), then greater than one (somewhat stretchable), then equal to one (combined stretch, then less than one (inelastic), and finally into much less than one (very elastic) .Note that the epsilon marker, ε, is often used to represent strength.

Figure 1. Elasticity Variation. As you have seen before, inflation demand from more than 1 in high prices and below 1 in low prices. Estimated stiffness decreases as one moves down the desired curve from left to right.

The fully expanded (or unlimited) demand curve refers to a situation in which the demand (Qd) increases by a fixed amount in response to any price drop at all. Similarly, the price sought to decrease to zero with any increase in price. The full expansion curve is above, as shown in Figure 2, below. While it is difficult to think of a real global example of enduring resilience, it will be worthwhile as we study the highly competitive markets. It is a situation in which consumers are highly sensitive to price changes

Figure 2. Endless stiffness. This shows the curve of the absolute quest. A horizontal line indicates that an unlimited amount will be claimed at a certain price. The required quantity responds strongly to price fluctuations, from zero to approximate P values ??to infinite when values ??reach P.

Please see the attached file for the complete solution