fa tax is imposed on the buyer of a product the demand curve would shift O downward by the amount of the tax O upward by more than the amount of the tax downward by less than the amount of the tax O upward by the amount of the tax
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- An increase in the supply of a good will decrease the total revenue producers receive if a. the demand curve is inelastic. b. the demand curve is elastic. c. the supply curve is inelastic. d. the supply curve is elastic.Describe the general appearance of a demand or a supply curve with infinite elasticity.Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?
- (True or false) Demand is negativley sloped. Supplu is perfectly inelastic. Putting a sales tax on buyers will cause the market price paid by buyers to sellers to decreaseHi may explain to me how to solve the question step by step? TQ Sally Henin has a price elasticity of demand for gasoline of -0.8. Her income elasticity for gasoline is 0.5. Sally's current income is $40,000 per year. Sally currently spends $800 per year on gasoline. The price of gasoline is currently $1.00 per gallon. a. A contemplated excise tax on gasoline will cause the price of gasoline to rise to $1.40. What impact will the tax have on Sally's consumption of gasoline? b. Since the purpose of the tax is only to discourage gasoline consumption, Congress is considering a $200 income tax rebate to lessen the burden of the gasoline tax. What impact will the rebates have on Sally's consumption of gasoline? 3. Assume that both the tax and rebate are implemented. Will Sally be worse off or better off?Price elasticity of demand for gasoline is estimated to be -0.3 in the short run and -1.2 in the long run. A decrease in taxes on gasoline would:O A. raise tax revenue in both the short run and long runO B. ower tax revenue in both the short run and long runO C. lower tax revenue in the short run but raise tax revenue in the long runO D. raise tax revenue in the short run but lower tax revenue in the long run
- 4. NSW government provides 200$ of active kids vouchers to an average family in NSW. 50% of such vouchers are unused and expire. Quarter million of such vouchers were downloaded by families. Assuming income elasticity of +0.75 calculate increase in spending through such vouchers.In the market for cars, the price elasticity of supply is +1.5, and the price elasticity ofdemand is -0.8. The equilibrium price is $ 30 thousand, and quantity is 120 million.(a) Assuming supply and demand are linear, reconstruct and draw the supply and demandcurves. Label the intercepts.(b) To reduce traffic, the government imposes a $400 tax on cars. What are PB and PS after thetax? What is the new equilibrium quantity? Illustrate them on the same graph.(c) How big is the change in consumer surplus, producer surplus, government revenue, anddeadweight loss?a) List FOUR main determinants of Income elasticity of demandb) The following relate to a consumer in a certain market:Income (Ksh) Price of X (Ksh) Demand for X Demand for Y5,000 15 30 1006,000 21 35 1208,000 30 40 150Required:Calculate the cross elasticity of demand as the price of X changes from Ksh. 15 to Ksh21 and interpret.QUESTION TWOIvy, a General Manager at Mumias Sugar Company, estimated a multiplicative demandfunction of the form: ?? = ???? ??1?0?0 using a cross-section data collected in thecompany sales on 30th June, 2016. The estimation results are as follows:Constant Price (P) Income (I) Price of Other Good (P0)Estimated coefficient 0.022 -0.223 1.354 0.133Standard Error 0.012 0.056 0.502 0.814t-statistic (1.19) (-3.98) -2.69 -0.13Number of Observations, n = 210; R-squared = 0.7516Critical Students' t = 1.96 at 5% Level of Significance2a) How would the coefficients and ?2 value be interpreted?b) What will the quantity demanded be if the values of the independent variables…
- The price elasticity of demand for a product is estimated to be -2.3. At the initial price of $20, the quantity demanded was 10 units. If the firm increases theprice to $22.50, quantity demanded is expected tobyO A. decrease: 28.75%6O B. increase; 12.596O C. decrease: 18.75%O D. increase: 17.2596Sally Henin has a price elasticity of demand for gasoline of -0.8. Her income elasticity for gasoline is 0.5. Sally's current income is $40,000 per year. Sally currently spends $800 per year on gasoline. The price of gasoline is currently $1.00 per gallon. a. A contemplated excise tax on gasoline will cause the price of gasoline to rise to $1.40. What impact will the tax have on Sally's consumption of gasoline? b. Since the purpose of the tax is only to discourage gasoline consumption, Congress is considering a $200 income tax rebate to lessen the burden of the gasoline tax. What impact will the rebates have on Sally's consumption of gasoline? c. Assume that both the tax and rebate are implemented. Will Sally be worse off or better off?1. Trek Inc., which sells bikes, changed the price of their foldable bikes from P3,000 to P3,500. As aresult, the quantity of their product sold went from 700 bikes to 500 bikes. Compute for the priceelasticity of demand. Indicate whether the product’s demand is elastic or inelastic. 2. Miko is a collector of matchbox cars. He used to buy five (5) cars every payday. However, whenhis income was raised from P17,000 to P20,000, he started to buy 10 cars. What is the incomeelasticity of demand?
