Use calculus to show that an increase in a specific sales tax t reduces quantity by less and increases tax revenue by more (or, if negative, reduces tax revenue by less) the less elastic the demand curve. [Hint: The quantity demanded depends on its price, which in turn depends on the specific tax, Q(p(T)), and tax revenue is R = pQ(p(t)).] The effect of a sales tax t on quantity is OA. dQ/dt = n/(n-e), which increases as & approaches 0. OB. dQ/dt = (1 + 8)Q(dp/dt), which increases as e approaches 0.. OC. dQ/dt = e(Q/p)(dp/dt), which decreases as e approaches 0. OD. dQ/dt = e(Q/p)(dp/dt), which increases as e approaches 0. OE. dQ/dt = n/(n-e), which increases as n approaches infinity.
Use calculus to show that an increase in a specific sales tax t reduces quantity by less and increases tax revenue by more (or, if negative, reduces tax revenue by less) the less elastic the demand curve. [Hint: The quantity demanded depends on its price, which in turn depends on the specific tax, Q(p(T)), and tax revenue is R = pQ(p(t)).] The effect of a sales tax t on quantity is OA. dQ/dt = n/(n-e), which increases as & approaches 0. OB. dQ/dt = (1 + 8)Q(dp/dt), which increases as e approaches 0.. OC. dQ/dt = e(Q/p)(dp/dt), which decreases as e approaches 0. OD. dQ/dt = e(Q/p)(dp/dt), which increases as e approaches 0. OE. dQ/dt = n/(n-e), which increases as n approaches infinity.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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![Use calculus to show that an increase in a specific sales tax t
reduces quantity by less and increases tax revenue by more (or,
if negative, reduces tax revenue by less) the less elastic the
demand curve. [Hint: The quantity demanded depends on its price,
which in turn depends on the specific tax, Q(p(T)), and tax revenue
is R= pQ(p(t)).]
The effect of a sales tax t on quantity is
OA. dQ/dt = n/(n-e), which increases as & approaches 0.
OB. dQ/dt = (1 + E)Q(dp/dt), which increases as e approaches
0..
OC. dQ/dt = e(Q/p)(dp/dt), which decreases as & approaches
0.
OD. dQ/dt = e(Q/p)(dp/dt), which increases as & approaches 0.
OE. dQ/dt = n/(n-e), which increases as n approaches infinity.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6fe9af21-d25b-4540-a3cc-0ad469a8dc5b%2F54597b33-70f2-4ea7-a0cf-e5fc7190f9a6%2Fs8pcqcp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Use calculus to show that an increase in a specific sales tax t
reduces quantity by less and increases tax revenue by more (or,
if negative, reduces tax revenue by less) the less elastic the
demand curve. [Hint: The quantity demanded depends on its price,
which in turn depends on the specific tax, Q(p(T)), and tax revenue
is R= pQ(p(t)).]
The effect of a sales tax t on quantity is
OA. dQ/dt = n/(n-e), which increases as & approaches 0.
OB. dQ/dt = (1 + E)Q(dp/dt), which increases as e approaches
0..
OC. dQ/dt = e(Q/p)(dp/dt), which decreases as & approaches
0.
OD. dQ/dt = e(Q/p)(dp/dt), which increases as & approaches 0.
OE. dQ/dt = n/(n-e), which increases as n approaches infinity.
Transcribed Image Text:Further, the effect of a sales tax ton tax revenue is
OA. dR/dt = (1 + ε)Q(dp/dt), which increases as & approaches
0.
OB. dR/dt = (1 + ε)Q(dp/dt), which decreases as e approaches
0.
OC. dR/dt = n/(n-e), which increases as & approaches 0.
D. dR/dt = (1 + ε)Q(dp/dt), which increases as & approaches
negative infinity.
OE. dR/dt = (1 + ε)p(dp/dt), which increases as & approaches
0
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