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Suppose the elasticity of demand for luxury cars is -1.5. The elasticity of supply for luxury cars is 2.5. The elasticity of demand for compact cars is -.90, while the elasticity of supply for compact cars is 1.25. a. The government imposes a tax of $500 per car on the producers of the cars. How much has the after-tax price changed in each market compared to the non-tax case. b. Suppose the untaxed market equilibrium price and quantity is $75k and 2 million, respectively, for the luxury car market, and $25k and 10 million, respectively, for the compact car market. What is the deadweight loss in the market for all cars resulting from the tax? c. Use the information from b. to continue. Suppose the government eliminates the tax on compact cars, and raises taxes on the luxury cars to roughly make up for the lost revenue. Since there were 5x as many compacts as luxury, the government raises the tax on luxury cars by a factor of 5 to $2500 per car. Calculate the deadweight loss in the car market now. d. Provide a brief explanation for your result in c in comparison to b.
In Kessy's old kitchen, he could bake 10 cookies or mix 15 glasses of lemonade in one day. Now Kessy has a larger oven and refrigerator. How does this impact his production possibility frontier A) It increases his production possibility frontier. B..
this problem is intended to be more open-ended than previous assignments so you can get a feel for what its like to do
When a household buys a new house, does that represent consumption, saving, or investment? What factors may influence a household when deciding between buying stocks, bonds, or a house?
Create a formal, written contract based on the hypothetical situation - Besides including the above list and the standard elements of a contract, you are to also include the following clauses into your formal,
riggs corp. is planning to spend 650000 on a new marketing campaign. they believe that this will result in additional
A major point of the Baumol-Tobin model of the transactions demand for money is that they show that the
A gasoline station very near a professional football stadium parks cars on its lot to make money on game days. Last year it charged $4.00 per car and parked 1000 cars. This year it raised the parking price to $5.00 and parked 850 cars. Did the statio..
problem 1. an individual has to choose between investment a and investment b. the individual estimates that the income
Demand for a managerial economics text is given by Q=20,000-300P. The book is initially priced at $30.00. Write the demand equation for which the price elasticity of demand is zero for all prices.
Economists often study and evaluate economic policies by country or region. As an economist, evaluate different regional trading arrangements.
Suppose that the price of good X rises and the price of good Y falls in such a way that the consumers new optimal consumption bundle lies on the same indifference curve as his old bundle.
problem 1 the haas corporations executive vice president circulates a memo to the firms top management in which he
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