Explain this affect the elasticity of demand for gasoline

Reference no: EM1328951

Impact of Taxation on Pricing

To reduce imports of foreign oil, it has been proposed that the United States impose a substantial tax on gasoline. However, it is well known that the short-run elasticity of demand for gasoline is very low. What will happen to the total quantity of gasoline sold if there is an additional gasoline tax? Would the tax be effective in reducing gasoline imports? Would the tax be effective in raising tax dollars for the government?

Alternatively, suppose that gasoline substitutes such as gasohol become widely available, and the tax is applied only to gasoline. How would this affect the elasticity of demand for gasoline? Would the tax be more or less effective now in reducing imports?

Reference no: EM1328951

Questions Cloud

Relationship between business vision and business strategy : Explain the relationship between business vision and business strategy?

Give a variable whose value is a letter grade : suppose that grade is a variable whose value is a letter grade-- any one of the following letters: 'A', 'B', 'C', 'D', 'E', 'F', 'W', 'I'. Assume further that there are the following int variables, declared and already initialized: acount, bcount,..

Describe the concept of time value of money : Explain the concept of Time Value of Money (TVM). What are its components? why is it a foundational principle of finance?

Implement to meet the mandate from management : We are developing a program for a group experience Supply Chain Managers and have drafted the questions below which we will include as a part of the program. Please assist by providing detailed responses to the following questions along with citat..

Explain this affect the elasticity of demand for gasoline : Explain how would this affect the elasticity of demand for gasoline

The possible strategies to ensure change sustenance : What are the possible strategies to ensure change sustenance.

Key element of a successful path-goal leader : The key element of a successful path-goal leader is the integration of rewarding subordinates for a job well done.

The elements for a entry strategy for home depot : I need help on writing up the elements for a entry strategy for Home Depot from a management perspective.

Discuss software testing as a career path in brief : discuss software testing as a career path in brief. The techniques for solving linear equations and linear inequalities are similar, yet different. Explain and give an example of both a linear equation and a linear inequality that demonstrates this..

User Account

All Pages