### Ticket Tax Impact on Revenue and Demand Elasticity#### Graph OverviewThe image contains a graph displaying the relationship between the quantity of tickets (in thousands) and a variable which might represent price or revenue. The specific details of the axes are not entirely visible, but there is a clear intersection of data points at the 38 thousand and 76 thousand mark on the Quantity of Tickets axis.#### Tax ImplementationSeeing a golden opportunity to raise revenue, the city of Boston levies a per ticket tax of $5 to be paid by the ticket buyer. Boston's famously civic-minded lot, send in the $5 per ticket.#### True or False StatementThe question presented to students is:"True or False: Both the team's owners and the fans share the tax burden because demand is elastic."- **Options:** - True - False---#### Explanation- **Demand Elasticity:** This is a measure of how much the quantity demanded of a good responds to a change in the price of that good. When demand is elastic, consumers buy significantly fewer goods in response to price increases.- **Tax Burden Sharing:** In this context, when both the team's owners and fans share the tax burden, it indicates that the cost of the $5 tax is being distributed between the consumer and the producer. The producer adjusts the ticket prices in response to maintain sales, thus forming an equilibrium in the market considering the demand's elasticity.#### Interactive ElementStudents are prompted to select the correct answer (True or False) and have the option to "Grade It Now" to check their understanding of the economic principles discussed. ---This explanation and detailed description of the elements in this image would be helpful for students learning about economics, particularly in understanding how taxes impact both producers and consumers, and the concept of elasticity in demand.

If the demand is inelastic then a greater portion of the tax is bear by buyers (fans). If the demand…

Answered: True or False: Both the team's owners…

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True or False: Both the team's owners and the fans share the tax burden because demand is elastic. O True O False

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter6: Demand And Elasticity

Section: Chapter Questions

Problem 3TY

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When Price is increased from $40 to $42, the Quantity Demanded falls from 50 units to 45 units, while the Quantity Supplied increases from 50 units to 70 units. Use this information to:(i) Calculate the Price Elasticity of Demand and the Price Elasticity of Supply.(ii) Give the name of the Price Elasticity of Demand and explain what the coefficient tells you about the product.(iii) Calculate the Total Revenue when price is $42.
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Elasticity and Tax Revenue Choco Cookies sell for $40/box, of which $10 consists of tax, and 66,666 boxes are sold every year. The price elasticity of demand for Choco Cookies is -4. All other cookies sell for $30/box (including a $l0 tax), and 40,000 boxes are sold every year. The cross price elasticity of demand for other cookies, with respect to a change in the price of Choco Cookies, is 0.5. The government raises the tax on Choco Cookies from $10 to $l1 per box, all of which is passed through to the consumer in the form of higher prices. Calculate the change in total government revenue. Should the government raise the tax? Why or why not? Explain your answer.
On Tuesday , price and quantity demanded $7 and 120 units respectively, Ten days later price and quantity demanded are $6 and 150 units respectively what is the price elasticity between $6 and $7 The price elasticity graph to illustrate
(a) You went to the market to buy groceries. You noticed that the price of the tea increased in the market from April to September. Now that you have a knack for elasticity, you wanted to check something. You asked the customers assistant of the store for some information. The information you collected is mentioned below. Information of Tea Market: Price Quantity April 12 14 September 18 10 Information of Coffee Market: Quantity April 12 September 18 Out of curiosity, you wanted to see the effect of change in price of tea on the quantity demanded for coffee. What would be the cross price elasticity of demand due to the price increase of tea? Do not convert into percentage. Give your answer in 2 decimal places. E.g. If you get XED = 0.253 then submit 0.25 (b) Based on the findings in 6(a), you can comment on the relationship of tea and coffee Tea and coffee are - One word answer (complementary/substitute/neutral) goods
PQ 9.02 Tax revenue is likely to rise due to a higher tax rate if the elasticity of demand is and the elasticity of supply is Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 0.8; 0.9 b 0.9; 1.1 1.1; 0.9 d 1.2; 1.4
Suppose that a large city has dozens of apartment complexes that are nearly identical in terms of size, age, and amenities. Assume the demand curve for an apartments at an individual complex is perfectly elastic. If the city places an excise tax on apartments, who will pay the tax? What will happen to the quantity demanded. Explain and show graphically. For graphical purposes, assume the supply of apartments is upward sloping.
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The schedule below shows the quantities of shoes demanded at each income level in a community from 2020 to 2021: Year Income (R) Quantity (units) 2020 5 000 1 000 2021 6 500 900 3.1 Calculate the income elasticity of demand, using the arc method and interpret your result. 3.2 List any four factors that could result in the shoes having inelastic price elasticity of demand. 3.3 Explain the importance of understanding the relationship between price elasticity of demand and total revenue.
Calculate, interpret and try to explain where applicable in each question, why the elasticities of demand for the following examples occur: a. The government announced an introduction of excise tax from R1 to R1.50 per bottle of beer. This increase results in an overall price increase from R9 to R10.50 per bottle to consumers. The expected tax revenue from this will be R30,000. Before the tax hike, 28,000 beers were sold. b. What will happen to the total revenue of soft drink companies if the elasticity of demand for soft drinks is higher than 1 and the price of soft drinks decreases? c. The quantity demanded of a popular magazine decreases from 10,000 copies to 6,000 per month after the publisher increased the price of a copy from R25 to R40. Total revenue from sales of a prescribed textbook on economics increased from R50,000 to R60,000 when the price of the book increased from R400 to R600 per book. Explain why.