You are Lori Lightfoot. The city needs money. You are contemplating 2 sources of revenue:levying a tax on gas in Chicago at $.50/ gal, and/or increasing the CTA fare. The 2 demandschedules are as follows.Gas priceGallons demanded (in millions)CTA fareNumber of riders(one way) (in millions)$4.501$2.004.001.11.753.501.21.50103.001.3Answer the following questions1. Are the 2 demand curves straight lines? Is the elasticity constant on each curve at eachprice? If so, what is it? If not, what is it?2. Is one strategy better than the other (just from a money perspective)? Why? Does itdepend on where the tax/fare is instituted?3. From what you know of elasticity and the real world, is raising the price the best policy?Given your answer, do all consumers share equally in the tax?Your answers should be complete enough to answer each question.

Price elasticity of demand measure the responsiveness of a change in the price of a commodity on the…

Answered: You are Lori Lightfoot. The city needs…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

You are Brandon Johnson. The city needs money. You are contemplating 2 sources of revenue: levying a tax on gas in Chicago at $.50/ gal, and/or increasing the CTA fare $.25. The 2 demand schedules are as follows. Gas price Gallons demanded (in millions) CTA fare Number of riders (one way) (in millions) $4.50 1 $2.00 6 4.00 1.1 1.75 8 3.50 1.2 1.50 10 3.00 1.3…
Suppose that the supply and demand schedules for a local electric utility are as follows:Price 17 16 15 14 13 12 11Quantity supplied 9 7 5 3 1 - -Quantity demanded 3 4 5 6 7 8 9The price is in cents per kilowatt hour (kWh), and the quantity is millions of kilowatt hours. The utilitydoes not operate at prices less than 13 cents per kWh.(a) Using graph paper and a ruler, or a computer spreadsheet or presentation program, carefully graphand label the supply curve for electricity.(b) On the same graph, draw and label the demand curve for electricity.(c) What is the equilibrium price of electricity? The equilibrium quantity? Label this point on yourgraph.(d) At a price of 17 cents per kWh, what is the quantity supplied? What is the quantity demanded? Whatis the relationship between quantity supplied and quantity demanded? What term do economists useto describe this situation?(e) At a price of 14 cents per kWh, what is the relationship between quantity supplied and quantitydemanded? What…
Please answer the following. A diagram and one paragraph should help to support your answer. Question: With consideration for elasticity (especially PED), what would be one industry in which the government instituting a subsidy would make sense and why?
The elasticity of demand for chocolate chip cookies is 0.6 and the elasticity of supply for these cookies is 1.9. If a tax is imposed on purchases of chocolate chip cookies, then the consumers would pay more of the tax. consumers would pay the entire tax because their demand is less elastic than the producers' supply. tax would be equally shared by the consumers and the producers. producers would pay more of the tax.
6 a)Draw a demand and supply schedule showing that a good will not be produced or sold? b) Draw a demand and supply schedule and show the deadweight loss of banning a good that buyers are willing to pay a price greater than the minimum supply price. c) What does it mean to say there is an “affordable” housing shortage?
An annual city permit fee causes the supply curve for hot dogs from food carts to shift from S1 to S2. The fee is based on number of units sold and therefore works like a per-item tax on sellers. Use the area tool to draw the area representing the deadweight loss that is due to the tax. To refer to the graphing tutorial for this question type, please click here. Price ($) 8. S2 S1 7.5 7 6.5 5.5 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 4 VIEW SOLUTION * SUBMIT ANSWER 7 OF 14 QUESTIONS COMPLETED MacBook Pro
Using the attached table, the equilibrium price before the tax is imposed is . The equilibrium price after the tax is imposed is a b Question 19 с d Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. $140, $160 $160, $140 $140, $150 Price (S) 100 $160, $150 120 140 160 180 200 220 Quantity Quantity Quantity Demanded Supplied Supplied w/Tax 600 530 575 540 550 550 525 560 570 500 475 450 580 590 495 505 515 525 535 545 555
C. Assume that if electricity is supplied by competitive firms, the market price is 55 and the quantity supplied is 8 (‘000 KWHs)? What is the amount of the deadweight loss to society of producing electricity by monopolist Global Gas and Electric? (It is helpful to have a graphical illustration based on the data above so you could calculate easily the DWL. )
Price (dollars per gallon) S2 $5.50 3.50 2.50 D Quantity (millions of gallons per month) 30 40 45 Assume the graph above illustrates a new tax put into the market for soft drinks. S2 is the supply curve with the $2 tax in place. What price would consumers pay if the tax was placed on consumers instead of producers? 1) $2.00 O 2) $3.50 3) $2.50 4) $1.50
1. Please explain what would happen to the market-clearing prices and quantities of e- cigarettes in the U.S. under the following hypothetical scenarios. a. Widespread reporting of e-cigarette or vaping use-associated lung injury (EVALI) increased the health risk concerns about vaping among existing e-cigarette users.
Consider a town in which only two residents, Hubert and Kate, own wells that produce water safe for drinking. Hubert and Kate can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Price Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) 3.60 0 0 3.30 35 116 3.00 70 210 2.70 105 284 2.40 140 336 2.10 175 368 1.80 210 378 1.50 245 368 1.20 280 336 0.90 315 284 0.60 350 210 0.30 385 116 0 420 0 Suppose Hubert and Kate form a cartel and behave as a monopolist. The profit-maximizing price is per gallon, and the total output is gallons. As part of their cartel agreement, Hubert and Kate agree to split production equally. Therefore, Hubert's profit is , and Kate's profit is . Suppose that Hubert and Kate have been successfully operating as a cartel. They each charge the monopoly price…
PDemand QDemand PSupply QSupply $10 0 $1 2 $9 3 $2 4 $8 6 $3 6 $7 9 $4 8 $6 12 $5 10 $5 15 $6 12 $4 18 $7 14 If the Government creates a quota of 6 units to reduce the consumption of the dangerous product, what will the price of the good be in the marketplace? How much deadweight loss is there? How much of the deadweight loss came from the consumers?

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS