When airfares between Santa Rosa and Los Angeles averages $69, the quantity consumed is 42,500 tickets. One day, an airline tax is levied equal to $10.00 and output falls to 37,000 tickets. Assume that air travelers end up paying 75% of the tax. Total expenditures or sales of air travel will be____. Total revenues generated by airlines will be _____ Total tax revenue generated by the government will be ____
When airfares between Santa Rosa and Los Angeles averages $69, the quantity consumed is 42,500 tickets. One day, an airline tax is levied equal to $10.00 and output falls to 37,000 tickets. Assume that air travelers end up paying 75% of the tax. Total expenditures or sales of air travel will be____. Total revenues generated by airlines will be _____ Total tax revenue generated by the government will be ____
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Design Of The Tax System
Section: Chapter Questions
Problem 4PA
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2. When airfares between Santa Rosa and Los Angeles averages $69, the quantity consumed is 42,500 tickets. One day, an airline tax is levied equal to $10.00 and output falls to 37,000 tickets. Assume that air travelers end up paying 75% of the tax.
- Total expenditures or sales of air travel will be____.
- Total revenues generated by airlines will be _____
- Total tax revenue generated by the government will be ____
- Total taxes paid by air travelers will be ____
- Total taxes paid by airlines will be ____
- Calculate the price elasticity of demand and & interpret coefficient. Use the general formula, not the mid point formula
- Calculate the price elasticity of supply and interpret coefficient. Use the general formula, not the mid point formula.
- How do total sales in the airline market before and after the tax support your answer in (n) and/or (o)?
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