Microeconomics
11th Edition
ISBN: 9781260507041
Author: Colander, David
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 7QE
(a)
To determine
The impact of the proposals in two different groups.
(b)
To determine
Check which group will support a regulatory policy.
(c)
To determine
Check which group will support a tax policy.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
You were gifted a box of 50 thermos bottles that you do not need and you plan to sell them on Ebay. You were initially thinking of asking for $20 per bottle, but then you found out that demand is elastic at $20.
Should you lower your asking price?
Yes, because when demand is elastic, a lower price increases revenue.
Yes, because when demand is inelastic, a lower price increases revenue.
No, because when demand is inelastic, a lower price increases revenue.
No, because when demand is elastic, a higher price increases revenue.
A local government is seeking to impose a specific tax on hotel rooms. The price elasticity of supply of hotel rooms is 3.5, and the price elasticity of demand is 0.3.
If the new tax is imposed, who will bear the greater burden-hotel suppliers or hotel consumers?
The hotel consumers pay percent and hotel suppliers pay
percent of the tax. (Enter your responses rounded
one decimal place.)
A city government decides to tax hotel
rooms to raise money. Before the tax,
1000 rooms were typically rented out per
month. After the tax, the number of
rooms rented per month falls to 900, the
amount paid by hotel guests rises to $130
and the amount received by sellers falls
to $110 per room. If the price per hotel
room was $100 per night before the tax,
which of the following can we conclude?
The supply of hotel rooms is more price
elastic than is the demand
The demand for hotel rooms is more
price elastic than is the supply
The supply of hotel rooms after the tax is
greater than the demand for hotel rooms
The demand for hotel rooms after the tax
is greater than the supply of hotel rooms
We cannot conclude any of the options
given with only the information provided.
Chapter 8 Solutions
Microeconomics
Ch. 8.1 - Prob. 1QCh. 8.1 - Prob. 2QCh. 8.1 - Prob. 3QCh. 8.1 - Prob. 4QCh. 8.1 - Prob. 5QCh. 8.1 - Prob. 6QCh. 8.1 - Prob. 7QCh. 8.1 - Prob. 8QCh. 8.1 - Prob. 9QCh. 8.1 - Prob. 10Q
Ch. 8.W - Prob. 1QECh. 8.W - Prob. 2QECh. 8.W - Prob. 3QECh. 8.W - Prob. 4QECh. 8.W - Prob. 5QECh. 8.W - Prob. 6QECh. 8.W - Prob. 7QECh. 8.W - Prob. 8QECh. 8.W - Prob. 9QECh. 8.W - Prob. 10QECh. 8.W - Prob. 11QECh. 8.W - Prob. 12QECh. 8.W - Prob. 13QECh. 8.W - Prob. 14QECh. 8.W - Prob. 1QAPCh. 8.W - Prob. 2QAPCh. 8.W - Prob. 3QAPCh. 8.W - Prob. 4QAPCh. 8.W - Prob. 5QAPCh. 8.W - Prob. 1IPCh. 8.W - Prob. 2IPCh. 8.W - Prob. 3IPCh. 8.W - Prob. 4IPCh. 8.W - Prob. 5IPCh. 8.W1 - Prob. 1QCh. 8.W1 - Prob. 2QCh. 8.W1 - Prob. 3QCh. 8.W1 - Prob. 4QCh. 8.W1 - Prob. 5QCh. 8.W1 - Prob. 6QCh. 8.W1 - Prob. 7QCh. 8.W1 - Prob. 8QCh. 8.W1 - Prob. 9QCh. 8.W1 - Prob. 10QCh. 8 - Prob. 1QECh. 8 - Prob. 2QECh. 8 - How would an economist likely respond to the...Ch. 8 - Prob. 4QECh. 8 - Prob. 5QECh. 8 - Prob. 6QECh. 8 - Prob. 7QECh. 8 - Prob. 8QECh. 8 - Prob. 9QECh. 8 - Prob. 10QECh. 8 - Prob. 11QECh. 8 - Prob. 12QECh. 8 - Prob. 13QECh. 8 - Prob. 14QECh. 8 - Prob. 15QECh. 8 - Prob. 16QECh. 8 - Prob. 17QECh. 8 - Prob. 18QECh. 8 - Prob. 19QECh. 8 - Prob. 20QECh. 8 - Prob. 21QECh. 8 - Prob. 22QECh. 8 - Prob. 23QECh. 8 - Prob. 24QECh. 8 - Prob. 1QAPCh. 8 - Prob. 2QAPCh. 8 - Prob. 3QAPCh. 8 - Prob. 4QAPCh. 8 - Prob. 5QAPCh. 8 - Prob. 1IPCh. 8 - Prob. 2IPCh. 8 - Prob. 3IPCh. 8 - Prob. 4IPCh. 8 - Prob. 5IPCh. 8 - Prob. 6IPCh. 8 - Prob. 7IPCh. 8 - Prob. 8IPCh. 8 - Prob. 9IPCh. 8 - Prob. 10IP
Knowledge Booster
Similar questions
- The government is considering an increase in the tax on gasoline. They know that the price elasticity of demand for gas is -0.25. The current price is $2.00 per gallon. They are willing to allow the quantity of gas sold to fall by 10%. What would be the approximate tax increase (in cents per gallon) that would lead to a 10% reduction in quantity demanded? Multiple Choice 8 cents 40 cents 80 cents 20 cents 25 centsarrow_forwardSuppose the elasticity of demand for used cars is estimated to be 3. What does this mean? What will be the effect on the quantity demanded for used cars if the price rises by 10 Percent? Suppose a university raises its tuition from $3,000 to $3,500. As a result, student enrollment falls from falls from 5,000 to 4,500. Calculate the price elasticity of demand. Is demand elastic, unitary elastic, or inelastic? Suppose the movie theater raises the price of popcorn 10 percent, but customers do not buy any less of it. What does this tell you about the price elasticity of demand, and what will happen to total revenue as a result of the price increase? Suppose the income elasticity of demand for furniture is 3 and the income elasticity of demand for physician services is 0.3. Compare the impact on furniture and physician services of a recession that reduces consumer income by 10%. Opponents of increasing the tax on gasoline argue that the big oil companies just pass the tax…arrow_forwardThe article described shortcomings of using CAFE standards to improve fuel economy and emissions of carbon from automobiles: “Taxing carbon emissions or gasoline directly, as Europe does, would be far more cost-efficient.” The federal gasoline tax is 18.4 cents per gallon. The impact of an increase in the gasoline tax depends on the reaction of consumers to the tax. A research study found that the price elasticity of demand for gasoline is -0.06. Holding everything else constant, assume that an increase in the federal tax on gasoline results in a 5 percent increase in the price of a gallon of gasoline. If the price elasticity of demand for gasoline is -0.06, how much will the quantity demanded for gasoline change? Explain how you derived your answer.arrow_forward
- Suppose you work for a local car parts supplier, and you’re looking at ways to increase revenue. You remember from your economics course, that people respond to price changes. You decide to test this theory. Assume, that as the price of an alternator falls from $40.00 to $38.00 the quantity of Y demanded increases from 110 to 118. Then the coefficient of price elasticity of demand is: If you want to increase revenue, you should:arrow_forwardThe price elasticity of demand for beer among young adults (age 18 to 24) is about 1.30, and the number of highway deaths is roughly proportional to the group’s beer consumption. If a state imposes a beer tax that increases the price of beer by 20%, by how much will the number of highway deaths among young adults decrease?arrow_forwardAccording to the article, after the city of Berkeley imposed a $0.01 per ounce tax on sugar-sweetened beverages (SSBs), by what percent did consumption of SSBs fall among Berkeley's low-income residents? Who was Berkeley's tax levied on in city law? Buyers or sellers? Assume that the price elasticity of supply for SSBs is elastic and the price elasticity of demand for SSBs is inelastic. What would be the outcome of the sales tax on sugary drinks if the law says that the tax is levied on sellers of the drinks? Who will pay the tax? Assume that the price elasticity of supply for SSBs is elastic and the price elasticity of demand for SSBs is inelastic. What would be the outcome of the sales tax on sugary drinks if the law says that the tax is levied on buyers of the drinks? Who will pay the tax? Explain why your answers to #3 and #4 are different or similar. What determines who pays the tax? What is your opinion of a tax on sugary drinks in your community? Would you be in favor or…arrow_forward
- Supply in the market for motorcycles is: *more elastic than supply in the market for pancakes. *less elastic than supply in the market for pancakes. *the same elasticity as supply in the market for pancakes. *There is not enough information to tell which has a higher elasticity.arrow_forwardYour friend is a talented artist. She has no other employment options, she finds painting effortless, and the cost of materials is low enough that it can be safely ignored. Based on your analysis of market data, you estimate that elasticity of demand for her paintings is given in the displayed table. If your friend wants to maximize her income, what price do you advise her to charge for her paintings? Include a brief explanation. (If you think you can only determine a price range, as opposed to a precise price, give a price range.)arrow_forwardGive answer in step by steparrow_forward
- HOW DO YOU RESPOND TO PRICE ELASTICITY? People have unlimited needs and wants for their personal satisfaction and because of that the prices of products easily get changed. Everyone is affected with the new normal in the market. The prices of products have become very expensive since the outbreak of the pandemic, not only in our locality, but in the whole world. If your income or the income of your family is not enough to purchase the basic commodities needed by your family, what goods would you buy, instead? What economic or marketing strategies would you apply? How would you respond to the price changes of these commodities?arrow_forwardWho would pay a tax imposed on the supplier when the price elasticity of supply is inelastic and the price elasticity of demand is elastic?arrow_forwardIf consumers expect the future price of large screen HD TVs to increase, what will be the current effect on the price and quantity sold now? Price will increase and quantity sold will decrease. Price will decrease and quantity sold will increase. Price will decrease and quantity sold will decrease. Price will be indeterminate and quantity will decrease. O Price will increase and quantity sold will increase. Suppose the price elasticity of supply for gasoline in the short run is estimated to be 2.5. Due to an unexpected surge in the demand for gasoline, the price of gasoline increases by 20 percent. As a result, the quantity supplied of gasoline will increase by 50% increase by 20% increase by 8% decrease by 20% O decrease by 50%arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher: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
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning