Suppose that the long-run price elasticity of demand for gasoline is 0.55. Assume that the price of gasoline is currently 4.00 per gallon, the quantity of gasoline is 140 billion gallons per year, and the federal government decides to increase he excise tax on gasoline by $1.00 per gallon. Suppose that in the long run the price of gasoline increases by $0.70 per allon after the $1.00 excise tax is imposed. . Using the midpoint formula, after the tax is imposed, the new quantity of gasoline demanded is ear. (Enter your response rounded to two decimal places.) billion gallons per

Suppose that the long-run price elasticity of demand for gasoline is 0.55. Assume that the price of gasoline is currently 4.00 per gallon, the quantity of gasoline is 140 billion gallons per year, and the federal government decides to increase he excise tax on gasoline by $1.00 per gallon. Suppose that in the long run the price of gasoline increases by $0.70 per allon after the $1.00 excise tax is imposed. . Using the midpoint formula, after the tax is imposed, the new quantity of gasoline demanded is ear. (Enter your response rounded to two decimal places.) billion gallons per

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 10 We have the following information: When P = $5, quantity demanded is 120 units. When P = $10, quantity demanded is 100 units. When P = $15, the quantity demanded is 80 units. Assuming a linear demand, when P = $10, the elasticity of demand in total revenue. and a 1 percent decrease in the price will cause is-2, an increase is-1, a decrease is-2.5, an increase Ois -0.4, a decrease
10 True or False: Suppose you are advising the Egg Farmers of Canada on changes in the egg market. Suppose the current price is $3.00 per dozen eggs and the quantity demanded is 2.5 million dozens of egg per day. Suppose price elasticity of demand is constant at 0.8. You are considering reducing the supply, so that the price rises to $3.5 per dozen. Total expenditure on eggs by consumers will rise. Explain your answer carefully.
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Assume that the supply of gasoline is relatively inelastic and the supply of wheat is relatively elastic. If a tax is levied on both goods, what happens to the quantity of gasoline produced as compared to the quantity of wheat produced? The quantity of gasoline produced declines less than the wheat. The quantity of gasoline produced declines more than the wheat. The quantity of gasoline produced increases more than the wheat. The quantity of gasoline produced increases less than the wheat.
For each of the following pairs of goods, tell me which of the two goods you predict would have more elastic demand. Briefly explain why. (a) Required textbooks OR Romance novels (b) All movie tickets OR Tickets to movies in 3D (c) One of many Chinese restaurants in a city OR the only Indian restaurant in town
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