Taxing a good with relatively less elastic demand, helps government to raise more revenue with lower welfare loss.
<span>$11,320 with its interest rate over the year will be $13659.84. If Francine paid $436 each month for a year he would have paid off $5232 in a year. His debt balance would still be remanding at $8427.84. Francine will have paid off a large amount of his payment plan with the company however he will still be required to spend 18 months or so to pay back what he owes as there was a a 20.67% interest sum added to his payment plan with the company.</span>
Mass customization (build to order)
Answer:
a. mostly cigarette buyers.
Explanation:
The law of demand states an inverse relationship between quantity demanded of a good and it's price, keeping other factors affecting demand as constant.
Price elasticity of demand refers to the degree of responsiveness of quantity demanded to a change in price.
Alcohol and cigarettes are exceptions to the law of demand since in their case, the factor of addiction presides which outweighs rational decision making.
Thus, price elasticity of demand of cigarettes is inelastic. So a marginally higher price charged for cigarettes will not reduce their consumption.
A new tax on cigarettes would raise their prices. The manufacturers, to cover such taxes and maintain the same margin as before would further raise the prices of cigarettes further.
Thus, the tax burden would be shifted to the consumers and hence majorly borne by them.
Answer:
a. The effective price received by sellers is $0.40 per bottle less than it was before the tax.
Explanation:
When government imposes tax on a product, a seller's margin on such a product falls which the seller tries to recover from the buyer by raising the price of the product.
In the given case, $1 is tax payable to government out of which the seller recovers $0.60 from the buyer via increased price. So, the remaining $0.4 tax is being paid by the seller out of his own pocket.
Effective price received refers to net amount received by the seller after deducting expenses and taxes. So, in the given case, the seller now receives $0.4 less per bottle than the receipts before such tax was imposed.
