Suppose the market for grass seed can be expressed as Demand: QD = 100 - 2p Supply: QS = 3p At the market equilibrium, calculate the price elasticities of supply and demand. Use these numbers to predict the change in price resulting from a specific tax
What will be an ideal response?
At p = 20 Q = 60, e = -2 ∗ (20/60 ) = -0.67. n = 3 ∗ (20/60 ) = 1.
The change in price resulting from a specific tax = [n/(n - e)] ∗ tax = [1/1.67] ∗ tax = 0.6 ∗ tax.
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A normal profit for a self-employed entrepreneur is I. an opportunity cost. II. part of the implicit rental rate of the funds invested in the business
A) only I B) only II C) both I and II D) neither I nor II
The exchange of one good for another, without the use of money, is known as:
a. acquisitive exchange. b. liquidity. c. volatility. d. barter. e. currency.
When inflation rises, firms make
a. more frequent price changes. This raises their menu costs. b. more frequent price changes. This reduces their menu costs. c. less frequent price changes. This raises their menu costs. d. less frequent price changes. This reduces their menu costs.
Which of the following illustrates how the investment accelerator works?
a. An increase in government expenditures increases aggregate spending so that SnoozeBargain Co. decides to modernize its motels. b. An increase in government expenditures increases the interest rate so that SnoozeBargain Co. decides to modernize its motels. c. An increase in government expenditures increases the interest rate so that the demand for stocks and bonds issued by SnoozeBargain Co. rises. d. An increase in government expenditures decreases the interest rate so that SnoozeBargain Co. decides to modernize its motels.