You are planning a summer vacation and are about to book a hotel room online for $149 a night. However, when you get to the reservation screen, you are informed that you will be charged an additional $30 a night in various taxes that you have to pay to the hotel. Between you and the hotel, who do you think is carrying the larger share of the economic burden of the taxes? What ultimately determines whether you or the hotel bear the majority of the economic burden?
You are planning a summer vacation and are about to book a hotel room online for $149 a night. However, when you get to the reservation screen, you are informed that you will be charged an additional $30 a night in various taxes that you have to pay to the hotel. Between you and the hotel, who do you think is carrying the larger share of the economic burden of the taxes? What ultimately determines whether you or the hotel bear the majority of the economic burden?
Chapter12: The Partial Equilibrium Competitive Model
Section: Chapter Questions
Problem 12.10P
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Question
You are planning a summer vacation and are about to book a hotel room online for
$149 a night. However, when you get to the reservation screen, you are informed that
you will be charged an additional $30 a night in various taxes that you have to pay to
the hotel.
Between you and the hotel, who do you think is carrying the larger share of the
economic burden of the taxes? What ultimately determines whether you or the hotel
bear the majority of the economic burden?
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