Foundations of Economics, 8th Edition

Chapter Checkpoint

Click here to open your MyEconLab Study Plan and work these interactive problems online.

Study Plan Problems and Applications

1. In Florida, sunscreen and sunglasses are vital items. If the tax on sellers of these items is doubled from 5.5 percent to 11 percent, who will pay most of the tax increase: the buyer or the seller? Will the tax increase halve the quantity of sunscreen and sunglasses bought?

2. Suppose that the government imposes a $2-a-cup tax on coffee. What determines by how much Starbucks will raise its price? How will the quantity of coffee bought in coffee shops change? Will this tax raise much revenue?

Concerned ...