A) The town of Dimmsdale is a popular tourist destination. The problem is, the tourists are not always considerate of the beautiful landscapes in and around Dimmsdale. Cleanup efforts cost Dimmsdale $5005 a day. The town has decided that it would be only fair to finance this by a “bed tax"-a per-room-per-night tax on every occupied tourist accommodation room. Denote this tax (in dollars per room per night) by t. Dimmsdale has many small hotels, guest houses, and B&Bs. The providers of these (“hoteliers") can all be assumed to be in perfect competition with each other, and they are all similar enough that tourists consider them perfect substitutes. The demand function for rooms is Q,(p) = 700 - 5p, where Q, is the number of rooms demanded and p is the price per room per night in dollars. The marginal cost of providing a room is c = workers of Sunnyside). The total number of rooms available is fixed at Q = 400 (this $50 per night, 60% of which is labor costs (accruing to the

A) The town of Dimmsdale is a popular tourist destination. The problem is, the tourists are not always considerate of the beautiful landscapes in and around Dimmsdale. Cleanup efforts cost Dimmsdale $5005 a day. The town has decided that it would be only fair to finance this by a “bed tax"-a per-room-per-night tax on every occupied tourist accommodation room. Denote this tax (in dollars per room per night) by t. Dimmsdale has many small hotels, guest houses, and B&Bs. The providers of these (“hoteliers") can all be assumed to be in perfect competition with each other, and they are all similar enough that tourists consider them perfect substitutes. The demand function for rooms is Q,(p) = 700 - 5p, where Q, is the number of rooms demanded and p is the price per room per night in dollars. The marginal cost of providing a room is c = workers of Sunnyside). The total number of rooms available is fixed at Q = 400 (this $50 per night, 60% of which is labor costs (accruing to the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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