Government-Imposed taxes cause reductions in the activity that is being taxed, which has important implications for revenue collections To understand the effect of such a tax, consider the monthly market for vodka, which is shown on the following graph. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Vodka 100 90 Supply Quantity (Bottles) 40 80 Demand Price (Dollars per bottle) 60.00 Supply Price (Dollars per bottle) 40,0 70 60 Tax (Dollars per bottle) 20.00 50 40 30 Demand 20 10 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Bottles) PRICE (Dollars per bottle) FI LII TI Suppose the government imposes a $20-per-bottle tax on suppliers. At this tax amount, the equilibrium quantity of vodka is 50 bottles, and the government collects $800 in tax revenue. Now calculate the government's tax revenue if it sets a tax of $0, $20, $40, $50, $60, $80, or $100 per bottle. (Hint: To find the equilibrium quantity after the tax, adjust the "Quantity" field until the Tax equals the value of the per-unit tax.) Using the data you generate, plot a Laffer curve by using the green points (triangle symbol) to plot total tax revenue at each of those tax levels. Note: Riot your points in the order in which you would like them connected. Line segments will connect the points automatically. m/static/nb/ui/evo/index.html?deploymentid-5982815667993537455503082&elSBN 9780357133606&snapshotid=2925777&id=148007 CENGAGE MINDTAP Lafter Curve Homework (Ch 08) 2000 1000 1600 1400 1200 1000 600 600 400 200 TAX REVENUE (Dollars) 0 A 0 10 20 00 90 100 30 40 50 00 70 TAX (Dollars per botte) Suppose the government is currently imposing a $20-per-bottie tax on vodka. True or False: The government can raise its tax revenue by increasing the per-unit tax on vodka. True or False: The government can raise its tax revenue by increasing the per-unit tax on vodka. True O False Consider the deadweight loss generated in each of the following cases: no tax, a tax of $40 per bottle, and a tax of $80 per bottle. On the following graph, use the black curve (plus symbols) to illustrate the deadweight loss in these cases. (Hint: Remember that the area of a triangle is equal tox Base x Height. In the case of a deadweight loss triangle found on the graph input tool, the base is the amount of the tax and the height is the reduction in quantity caused by the tax.) ? 2000 1000 Deadweight Loss 1000 1400 1200 1000 33 HT LOSS (Dollars) 3 E 7 D O * CENGAGE MINDTAP Homework (Ch 08) 2000 1800 DEADWEIGHT LOSS (Dollars) 1000 1400 1200 1000 800 600 400 200 0 0 10 20 30 40 70 50 00 TAX (Dollars per bottle) As the tax per bottle increases, deadweight loss M BO 90 31 100 V Deadweight Loss Grade It Now Save &
