MindTap - Cengag Not secure l ng.cengage.com/st e Learning - Google Chrome x.htm

Question

MindTap - Cengag Not secure l ng.cengage.com/st e Learning - Google Chrome x.html?nbld = 720798&nbNodeld-27; 1 500 1 08&deploymentId;= 5673667995 533694 1 06830588&eISBN; = 9781 337096577#!&parentld;=271 500264 Aya Shehata- Homework (Ch 08) Due on Mar 18 at 11:S9 PM EDT 4. The Laffer curve Governments often place so-called sin taxes on goods or services such as cigarettes, alcohol, and pornography. These kinds of taxes are popular with politicians because they are usually more palatable to voters than income taxes. To understand the effect of such a tax, consider the monthly market for vodka, which is shown on the following groph. 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 80 6000e P oe 4000 Demand Price mare per bseie) Tax Wedge (DoWers per bottle) 40.00 par bottla) 70 20.00 50 20 10 0 18 3 54 T2 00 108 120 144 12 180 QUANTITY (Bottles) 10:59 AM O Type here to search rP ^ x ENG 3/13/2018

Explanation / Answer

At this tax amount, the equilibrium quantity of vodka is 45 bottles and the government collects (45x20) = $900 in tax revenue.

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