Gasoline & Politics In the spring of 2008, Senators John McCain and Hillary Clinton (who were then running for president) proposed a temporary elimination of the federal gasoline tax, effective only during the summer of 2008, in order to help consumers deal with high gasoline prices.Assume that during the summer, when gasoline demand is high because of vacation driving, gasoline refiners are operating at full capacity. What does this assumption suggest about the price elasticity of supply?In light of your answer to the previous question, whom do you predict would benefit from the temporary gas tax holiday?

If tax is cut, price of good declines. So, consumers benefit if demand is elastic. If supply is…

Answered: Gasoline & Politics In the spring of…

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter7: Consumer Choice And Elasticity

Section: Chapter Questions

Problem 9CQ

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Gasoline & Politics In the spring of 2008, Senators John McCain and Hillary Clinton (who were then running for president) proposed a temporary elimination of the federal gasoline tax, effective only during the summer of 2008, in order to help consumers deal with high gasoline prices.

Assume that during the summer, when gasoline demand is high because of vacation driving, gasoline refiners are operating at full capacity. What does this assumption suggest about the price elasticity of supply?
In light of your answer to the previous question, whom do you predict would benefit from the temporary gas tax holiday?

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