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Online Macroeconomics Assignment 8
(This assignment is worth 35 points. Each question is worth 5 points)
To make your answers stand out, please answer in bold, or a color.
1. Define and describe “price controls”.
2. What effect does the tax on a good have on buyers and sellers of the good?
3. How do the elasticities of supply and demand affect the deadweight loss of a tax?
4. Describe Tax incidence. Can government make buyers bear the entire burden of the sales tax?
5. What does the Laffer curve represent?
6. What happens to the deadweight loss and tax revenues when a tax is increased?
7. Considering what the Laffer curve illustrates, do you think the United States should lower its top marginal tax rate from the current level of 39.6% to 30%? Why or why not?
(Not just asking for opinion on whether taxes should be raised or lowered from 39.6%, but why?)
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