MicroeconomicsQuestion 1: True or False. Explain.a. When the demand curve of a good shift tothe left, it becomes more inelastic at every levelof price.b. If the tax burden falls entirely on buyers agood (tax in per unit imposed on seller), thedemand of that good should be perfectlyelastic.Question 2: Suppose the demand and supplyfor gasoline are given by =20-2P and Q -4+10where P is the price in $ per gallon, andquantity is measured in millions of gallons perdaya. Find the equilibrium price/quantity for thismarketb. How much is the price elasticity of demandand price elasticity of supply at thisequilibrium?c. Suppose that the state government decidesto tax $2/gallons on consumers. Find the newequilibrium prices and the new equilibriumquantityd. What is total tax payment in dollars to thestate government? How much is the share oftax paid by consumerse Graph your results

Answered: Image /qna-images/answer/f5eff9a5-b83a-4fa2-b0c6-98c311cede8f.jpg

Microeconomics Question 1: True or False. Explain. a. When the demand curve of a good shift to the left, it becomes more inelastic at every level of price. b. If the tax burden falls entirely on buyers a good (tax in per unit imposed on seller), the demand of that good should be perfectly elastic.

Microeconomics Question 1: True or False. Explain. a. When the demand curve of a good shift to the left, it becomes more inelastic at every level of price. b. If the tax burden falls entirely on buyers a good (tax in per unit imposed on seller), the demand of that good should be perfectly elastic.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The price elasticity of demand for beer among young adults (age 18 to 24) is about 1.30, and the number of highway deaths is roughly proportional to the group’s beer consumption. If a state imposes a beer tax that increases the price of beer by 20%, by how much will the number of highway deaths among young adults decrease?
Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.55. Which of the following events is consistent with a 20 percent decrease in the quantity of the good demanded? a. An increase of 11.0 percent in the price of the good b. an increase of 36.36 percent in the price of the good c. An increase in the price of the good from $11.00 to $20.00 d. an Increase in the price of the good from $20 to $31.00
which factor is least probable to affect price elasticity of demand? a..purchase cost relative to disposable income b..firms profit margin c.. affordability or availableness of substitute d..if the buyer is responsible for baring the price
If a strong economic recovery boosts average incomes, what would happen to the equilibrium price and quantity of a normal good and of an inferior good? The equilibrium price and quantity of a normal good would rise; those of an inferior good would fall. of a normal good would fall; those of an inferior good would rise. of a normal good would rise; those of an inferior good would also rise. of a normal good would fall; those of an inferior good would also fall.
1. As a transit planner for the city of Miami, you must predict how many people ride the Miami Metrorail and how much money is generated from train fares. According to a recent study, the short-run elasticity of demand for Metrorail is 0.62 and the long- run elasticity is 1.59. The current ridership is 50,000 people per day. Suppose the city commission decides to increase fares by 10%. Predict the changes in train ridership over a one-month period and a five-year period. ANS: b. Over the one-month period, will total revenue increase or decrease? What will happen in the five-year period? ANS
Would you consider your demand for gas to be relatively elastic or inelastic? What changes do you make to your demand for gasoline when the prices start to climb up?
Epi-pens are a name-brand medicine. Epi-pens are used to quickly inject epinephrine into the body in the event of a severe allergic reaction. Many Americans require Epi-pens due to potentially life-threatening allergies. Using the concept of elasticity, explain why the government would likely not impose a tax on the market for Epi-pens. Suppose the government believes the price of Epi-pens is too high, so they impose a price control on the market. Would the government use a price floor or a price ceiling in this situation? What effect would the chosen price control have on the market. Suppose that the number of adults developing severe allergies increases. At the same time the patent for Epi-pens expires, allowing new producers of Epi-pens to enter the market. Explain what will happen to the equilibrium price and quantity of Epi-pens.
suppose there is a spring producing 100 gallons of water each day, without cost to smith, who owns the land around the spring. nearby farmers need the water due to a recent drought a.) show the resulting equilibrium b.) what is the price elasticity of demand at the equilibrium
For each statement below, tell whether the statement is valid or invalid, and give a short explanation of your answer. Remember that your explanation will be related in some way to elasticity. 1. Coffee and tea should have a positive cross elasticity of demand. 2. Demand for Tide will be more elastic than demand for laundry detergents as a whole. 3. The government will prefer to put excise taxes on jewelry rather than on gasoline.