You have been asked to explain to Magdalena Andersson and Per Bolund what the effects will be of raising the tax on petrol by SEK 2 per liter (the tax is paid by the sellers). Magdalena Andersson (Minister of Finance) would very much like to know how much the tax revenue is affected and Per Bolund (Minister of the Environment) would like to know how the consumption of petrol (and thereby the environment) is affected. Explain to them under what circumstances consumption decreases much and little, and under what circumstances the tax increases much and little. Keep in mind that Per Bolund has not studied economics, so you should explain the terms you use if there is a risk of misunderstanding.

You have been asked to explain to Magdalena Andersson and Per Bolund what the effects will be of raising the tax on petrol by SEK 2 per liter (the tax is paid by the sellers). Magdalena Andersson (Minister of Finance) would very much like to know how much the tax revenue is affected and Per Bolund (Minister of the Environment) would like to know how the consumption of petrol (and thereby the environment) is affected. Explain to them under what circumstances consumption decreases much and little, and under what circumstances the tax increases much and little. Keep in mind that Per Bolund has not studied economics, so you should explain the terms you use if there is a risk of misunderstanding.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter4: Markets In Action

Section: Chapter Questions

Problem 18SQ

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