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The focus of this question is the market for Airbnb property rentals in the State of Hawaii. Assume that the market for Airbnb property rentals in Hawaii is currently in a state of equilibrium. Now assume the two disturbances below happen simultaneously (i.e. at the same time):
In order to encourage tourism, the government of the State of Hawaii offers Hawaiian homeowners a $100 subsidy (i.e. a payment made to homeowners from the state government) each time they make their home available to tourists for Airbnb rentals.
In order of offset the state budget shortfall, the State of Hawaii implements a $75 airport tax on all arriving and departing fliers that are not residents of the State of Hawaii.
What are your expectations as to how these two simultaneous disturbances will likely affect the future equilibrium price of Airbnb property rentals and the future equilibrium quantity of Airbnb property rentals (i.e. how do you think the future equilibrium will compare to the equilibrium that existed before the disturbances took place)? To start with, explain how each disturbance, independently, would affect the future equilibrium price and quantity. Provide support for your position. Finally, present your overall conclusion and provide support for your answer.
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Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..
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