9. peanut butter has an upward - sloping supply curve and a downward - sloping demand curve. if a 10 - cent…

9. peanut butter has an upward - sloping supply curve and a downward - sloping demand curve. if a 10 - cent - per - pound tax is increased to 15 cents, the government’s tax revenue answer a. increases by less than 50 percent and may even decline. b. increases by exactly 50 percent. c. increases by more than 50 percent. d. depends on whether supply or demand is more elastic.

9. peanut butter has an upward - sloping supply curve and a downward - sloping demand curve. if a 10 - cent - per - pound tax is increased to 15 cents, the government’s tax revenue answer a. increases by less than 50 percent and may even decline. b. increases by exactly 50 percent. c. increases by more than 50 percent. d. depends on whether supply or demand is more elastic.

Answer

Brief Explanations:

When the tax rate increases from 10 - cent to 15 - cent (a 50% increase in tax rate), the quantity demanded and supplied will change due to the law of demand and supply. Higher taxes may cause a significant drop in quantity transacted. Tax revenue is the product of tax rate and quantity transacted. If the drop in quantity transacted is large enough, tax revenue may not increase proportionally or may even decline.

Answer:

A. increases by less than 50 percent and may even decline.