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A city government decides to tax hotel rooms to raise money. Before the tax, 1000 rooms were typically rented out per month. After the tax, the number of rooms rented per month falls to 900, the amount paid by hotel guests rises to $130 and the amount received by sellers falls to $110 per room. If the price per hotel room was $100 per night before the tax, which of the following can we conclude? The supply of hotel rooms is more price elastic than is the demand The demand for hotel rooms is more price elastic than is the supply The supply of hotel rooms after the tax is greater than the demand for hotel rooms The demand for hotel rooms after the tax is greater than the supply of hotel rooms We cannot conclude any of the options given with only the information provided.

A city government decides to tax hotel rooms to raise money. Before the tax, 1000 rooms were typically rented out per month. After the tax, the number of rooms rented per month falls to 900, the amount paid by hotel guests rises to $130 and the amount received by sellers falls to $110 per room. If the price per hotel room was $100 per night before the tax, which of the following can we conclude? The supply of hotel rooms is more price elastic than is the demand The demand for hotel rooms is more price elastic than is the supply The supply of hotel rooms after the tax is greater than the demand for hotel rooms The demand for hotel rooms after the tax is greater than the supply of hotel rooms We cannot conclude any of the options given with only the information provided.

Microeconomics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter7: Consumer Choice And Elasticity
Section: Chapter Questions
Problem 13CQ: Suppose Erin, the owner-manager of a local hotel projects the following demand for her rooms: a....
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A city government decides to tax hotel rooms to raise money. Before the tax, 1000 rooms were typically rented out per month. After the tax, the number of rooms rented per month falls to 900, the amount paid by hotel guests rises to $130 and the amount received by sellers falls to $110 per room. If the price per hotel room was $100 per night before the tax, which of the following can we conclude? The supply of hotel rooms is more price elastic than is the demand The demand for hotel rooms is more price elastic than is the supply The supply of hotel rooms after the tax is greater than the demand for hotel rooms The demand for hotel rooms after the tax is greater than the supply of hotel rooms We cannot conclude any of the options given with only the information provided.
Transcribed Image Text:A city government decides to tax hotel rooms to raise money. Before the tax, 1000 rooms were typically rented out per month. After the tax, the number of rooms rented per month falls to 900, the amount paid by hotel guests rises to $130 and the amount received by sellers falls to $110 per room. If the price per hotel room was $100 per night before the tax, which of the following can we conclude? The supply of hotel rooms is more price elastic than is the demand The demand for hotel rooms is more price elastic than is the supply The supply of hotel rooms after the tax is greater than the demand for hotel rooms The demand for hotel rooms after the tax is greater than the supply of hotel rooms We cannot conclude any of the options given with only the information provided.
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