In Florida, sunscreen and sunglasses are vital items. If the ...

[Evvie72]

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?

Question 2

Refer to Figure 4-5. Suppose that instead of a price ceiling, the government imposed a price floor of R1. What is the area representing the portion of consumer surplus transferred to producers as a result of the price floor?
 
  A) A + B B) B C) A D) B + C

[tuate]

Answer to Question 1

Because sunscreen and sunglasses are necessities, the demand for them is inelastic. So, most of a tax imposed on them will be paid by the buyer. Even though the tax doubles, the quantity purchased is not halved because the demand is inelastic.

Answer to Question 2

B

[Evvie72]

Thanks for the timely response, appreciate it

[Zebsrer]

Gracias!