Question 91 c) Suppose that the government is interested in raising the tax revenue. The only option right now is to increase the tax rate either on X or Y. They know that Good X is elastic, and Good Y is inelastic. Which good should they increase the tax rate? N Question 10 There are two types of consumers. Group 1 has a higher willingness-to-pay for Good X than Group 2. More concretely, Group 1's demand for X is Q1-230-3p, and Group 2's demand for X is Q2-110-8p. (Note that, for each group, if the price is too high, their demand will be zero.) Find Group 1's price elasticity of demand if p-50.

Question 91 c) Suppose that the government is interested in raising the tax revenue. The only option right now is to increase the tax rate either on X or Y. They know that Good X is elastic, and Good Y is inelastic. Which good should they increase the tax rate? N Question 10 There are two types of consumers. Group 1 has a higher willingness-to-pay for Good X than Group 2. More concretely, Group 1's demand for X is Q1-230-3p, and Group 2's demand for X is Q2-110-8p. (Note that, for each group, if the price is too high, their demand will be zero.) Find Group 1's price elasticity of demand if p-50.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Consider some determinants of the price elasticity of demand: • Number of substitutes Whether the…

A: Elasticity measures the percentage change in quantity due to percentage change in price. The demand…

Q: 4. Min King, the world traveler, says if the airlines want to attract more passengers, they should…

A: Elasticity of demand describes how much a product or service's quantity desired changes in reaction…

Q: If cigarettes and marijuana had been found to be substitutes, what would a tax placed on cigarettes…

A: The desire of an individual to buy a product according to the willingness and ability to purchase a…

Q: Suppose that in Australia the price elasticity of steel demand of -1.5 and the price elasticity of…

A: "Price elasticity of demand measures the responsiveness of quantity demanded of a commodity with…

Q: Consumers view cake as an irreplaceable staple of any birthday party. Consumers also like to serve…

A: Price elasticity of demand The quantity requested price sensitivity is gauged by the price…

Q: Q76 If goods X and Y are complements and the price of X falls, all things equal, the demand curve…

A: According to the law of demand, there is an inverse relationship between the price of goods and…

Q: Suppose the demand schedule for burritos is as follows: Quantity Demanded (Income = $90,000) 25…

A: The income elasticity of demand can be calculated with the help of the previous level of income and…

Q: the price of a complementary good rises, the equilibrium price of good X will __________ and…

A: Equilibrium is achieved where Qs=Qd

Q: Quantity Price Demanded $ TR Test 265 8 XXXXXX 190 16 110 24 65 32 40 40 Problem 2 c: Total Revenue…

A: The Total revenue refers to the amount earned by the firm by selling its main product or service.…

Q: 1. Determinants of the price elasticity of demand Consider the following list containing several…

A: The objective of the question is to understand the determinants of price elasticity of demand and…

Q: a. If price elasticity of demand is -1.3 and price increases by 2 percent, quantity demanded…

A: (a) It is provided in the question that price elasticity of demand (Ed) is -1.3, an increase in…

Q: Gas Prices and Public Transit Ridership. Consider the effect of higher gasoline prices on public…

A: Cross-price elasticity of demand measures how the quantity demanded of one good responds to a change…

Q: A senator in a certain state proposes to reduce the state's cigarette-tax. His reasoning is that is…

A: Elasticity of demand explains how the change in price will effect the demand of that good or…

Q: If you estimate a price elasticity of demand equal to 1.25 (negative sign is implied), do consumers…

A: The incidence of a tax refers to how the burden of the tax is distributed between consumers and…

Q: All provinces impose sales taxes on gasoline, a good that is recognized to be price inelastic.…

A: The measure that depicts the percentage change in quantity being demanded of goods with respect to…

Q: The government's policy goal is to reduce sugar consumption since consuming a lot of sugar is linked…

A: Elasticity of demand is the proportional change in quantity demanded in response to change in price…

Q: The price elasticity of demand of a good depends in part on its relative necessity in comparison to…

A: Among other things, price elasticity depends upon the nature of the good. Nature in this sense…

Q: than $5. 2. Plot the price and quantity data given in the demand Achedule of exercise 1. Put price…

A: Since you have posted multiple questions, we will provide the solution to only the first question as…

Q: a. Based on these demand elasticity estimates, which fruit is most inelastically demanded? Which is…

A: a.The item which is most in-elastically demanded is the one with the least elasticity of demand…

Q: government is considering placing a tax on alcohol consumption (demand-side) with the goal of…

A: Price elasticity of demand(Ed) is the ratio of the %change in Qd) quantity demanded) and% change in…

Q: Year 1 2 Income $10,000 $10,000 Price of Good X $5 $10 Using the above table And the Midpoint Method…

A: Ans. The cross-price elasticity of demand measures the responsiveness of the percentage change in…

Q: Give short explanations of why each of the following statements is true (assume for your answer that…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Question

100%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

16.The average consumer income increased by 4%, and the quantity demanded of a good decreased by 2%. Which of the following statements is true? A- The income elasticity of demand cannot be determined. B-The income elasticity of demand is 0.5; the good is normal. C-The income elasticity of demand is –0.5; the good is inferior. D- The income elasticity of demand is 2; the good is normal. E- The income elasticity of demand is 2; the good is normal. 17. Use the graph to answer the question that follows If the market was initially in equilibrium and then the price was set at P3, what is the effect on the different surpluses that can be determined without calculations? A-Consumer surplus decreases, total surplus increases B-Producer surplus decreases, total surplus decreases. C-Producer surplus decreases, total surplus increases. D-Consumer surplus increases, total surplus decreases. E-Consumer surplus decreases, producer surplus increases
Suppose supply is P= 4 + (1/4)Qs and demand is P= 58 ―(1/2)Qs. At a glance, can you tell whether supply or demand is more price elastic in equilibrium? How? What does this tell you about who will pay more of a tax on this product?
Solve all questions compulsory.....
1. Suppose the demand for towels and supply of towels are given by the below: QD = 100 - 4P QS = P a. Find the equilibrium price and quantity using demand and supply functions above. b. Plot demand and supply curve on the same graph and point out the equilibrium quantity and price. You should draw each graph precisely with intercepts and slopes. c. Solve for the price elasticities of demand and supply at the equilibrium point. Which is more elastic: demand or supply? Simply explain why. d. Suppose there was a demand shock so that at each price 20 more towels are demanded since consumers want more. Plot the new demand curve on the graph that you derive in part (a). Find the new equilibrium price and quantity. (Hint: You may derive a new demand function by adding a constant to find a new equilibrium price and quantity.)
Using the midpoints formula presented in the textbook, calculate the price elasticity coefficient for each price level, starting with the coefficient for the $4 to $6 level. For each coefficient, indicate each type of elasticity: elastic demand, inelastic demand, or unitary demand. Post your answers into the table, Figure 1. Assume that the income of consumers changes by 10%, and as a result the quantity demanded for Good A changes by 8%. What is the income elasticity of demand for Good A? What does this mean for your company? Assume that the price of competing Good B decreases by 5% and as a result, the quantity demand for Good A decreases by 8%. What is the cross-price elasticity for your product? What type of goods are Good A and Good B?
#2
Use the concept of Price Elasticity of Demand to explain why the public policy recommendation of raising taxes on cigarettes causes State revenues to rise while also effectively deterring smoking among young people. Be sure to consider availability of substitutes and the effect of the percentage spent of each buyer’s budget when formulating a response. Who bears the brunt of the tax – the consumer or the producer? Are there any potential negative side effects of increasing taxes on cigarettes?
P $3.00 $2.66 $2.00 18. You are in the business of producing and selling hamburgers, French fries, pizza, and ice cream. The mayor of your city plans to impose a sales tax on one of these products. Based on the elasticities: j. k. Which of these goods would your customers least like to be taxed? Which of these goods would your customers prefer to be taxed? B S₁ So 130 150 bb bb Figure two: effect of excise tax on supply and demand QUESTION #19: a) TO OU a. b. C. b) a. b. C. Before the Tax: Price the Consumer Pays = Price the Producer Receives = Quantity = After the Tax, Price the Consumer Pays = Price the Producer Receives = Tax per unit = d. Quantity = e. Total Tax Revenue = f. Proportion of the Total Tax Consumers Pay = g. Proportion of the Total Tax Producers Pay = h. Who Pays the Burden of the Tax = i. DWL = ?
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
The demand for boxes of nails is estimated to be Q 185-10 p + 3 Y, Q2 where income is measured in thousands of dollars. If p = 5, and Y = 30, a. What is the income elasticity? Interpret and explain your result. What type of good is this? b. If the equation is then re-estimated using just dollars instead of thousands of dollars, what will be the effect on the coefficient for Y and the income elasticity? Explain your result. c. How would the income elasticity change if the price were increased to $9.50? Interpret and explain your result.
Suppose the price elasticity of demand for cigarettes is -0.7 and that the government can essentially set the price of cigarettes by altering the tax rate. If the government wishes to reduce the quantity of cigarettes demanded by 20 percent, how much must it raise the price of cigarettes? The government, to achieve its goal, must raise the price of cigarettes by percent. (Enter your response rounded to two decimal places)
24. Which of the following statements is correct? A) The demand for New Balance shoes is more elastic than the demand for shoes in general. B) The demand for shoes in general is more elastic than the demand for Nike shoes. C) The demand for luxuries is less elastic than the demand for necessities. D) The demand for a narrowly defined good is less elastic than the demand for a more broadly