Suppose Via Rail asked government authorities for permission to increase its commuter rates by 20 percent. The railroadargued that declining revenues made this rate increase essential. Opponents of the rate increase contended that therailroad's revenues would fall because of the rate hike. It can be concluded that:both groups felt that the demand was elastic but for different reasons.both groups felt that the demand was inelastic but for different reasons.the railroad felt that the demand for passenger service was inelastic and opponents of the rate increase felt itwas elastic.the railroad felt that the demand for passenger service was elastic and opponents of the rate increase felt it wasinelastic.

Economics is a social science that studies how individuals, businesses, governments, and societies…

Answered: Suppose Via Rail asked government…

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 7SQ

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Similar questions

If a decrease in the price of movie tickets increases the total revenue of movie theaters, this is evidence that demand is a. price elastic. b. price inelastic. c. unit elastic with respect to price. d. perfectly inelastic.
For each of the following, identify where demand is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic: a. Price rises by 10 percent, and quantity demanded falls by 2 percent. b. Price falls by 5 percent, and quantity demanded rises by 4 percent. c. Price falls by 6 percent, and quantity demanded does not change. d. Price rises by 2 percent, and quantity demanded falls by 1 percent.
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H11.
Assume a new nuclear power plant wishes to raise consumers’ electrical rates to cover the unexpectedly high cost of construction. However, the government regulatory commission refuses to let electrical rates be increased because they say it will only worsen the power plant’s financial problems. We can conclude that The power plant is arguing that the demand for elasticity is elastic, whereas the government is arguing that it is inelastic. The power plant should increase its electrical rates if the demand for electricity is elastic. The power plant should decrease its electrical rates if the demand for electricity is inelastic d. The demand for electricity must be unitary elastic
Suppose that the government enacts a tax on retail sales of road salt, which homeowners and businesses put on walkways and driveways. Assume that the supply of salt is perfectly elastic, due to the ease with which suppliers can stockpile the product.Before the tax, 900 fifty-pound bags of road salt are sold at an equilibrium price of $7 per bag. After the tax, 775 bags are sold at $8 per bag. How much revenue does the tax generate for the government? What is the amount of the tax? $
7. Effect of a tax on buyers and sellers The following graph shows the weekly market for craft beer in some hypothetical economy. Suppose the government levies a tax of $11.60 per case. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per case) 50 45 40 35 30 25 20 15 10 5 0 0 Tax Wedge Demand 50 100 150 200 250 300 350 QUANTITY (Cases of craft beer) Supply 400 450 500 ?
The Australian government have suggested that they might need to increase GST to help fund the COVID-19 rescue package. GST is a tax on goods and services usually paid at the point of sale.Consider the market for bread. Suppose a loaf costs $4.15 and includes a 15-cent tax per loaf. q4- Has the government revenue increased or decreased? Explain the change using the concept of elasticity.
If the coffee company Starbucks raises the prices it charges its customers, and Starbucks says they are raising prices so they can increase their revenues, and keep up with inflation in their cost of inputs, then what can you conclude Starbucks believes about the elasticity of demand for their product. Please upload your answer to this folder. Just a quick 2-3 sentence answer is sufficient. You do not have to do any market research, just use what you have learned about elasticity in this class.
Assume that the demand curve is a straight line. If the price per unit of a good rises from $4.50 to X1, it is expected that monthly demand will fall from X2 units to 250,000 units. Give your own appropriate X1 and X2. What is the point price elasticity of demand when the price is $4.50? What is the arc price elasticity of demand over these ranges of price and output? Is the demand for this good price sensitive?
If government officials are mainly interested in generating tax revenue, then they should tax goods for which demand is price elastic. Question 11Select one: True False

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