What happens to the total number of acres rented

Assignment Help Business Economics

Reference no: EM131118554

The residents of Mobile City all live in mobile homes which they own. However, they rent land for their homes from absentee landowners. The rental supply of land is inelastic at 100 acres. The demand curve for acres is given by: R = $400 - $2L, where "R" is the monthly rent per acre and "L" is the quantity of acres rented.

a) How many acres are rented? Explain. What is the market rent of an acre? Explain.

b) Suppose the city imposes a tax of $40 per acre that by statute falls on the renter. What happens to the gross rent per acre? To the net rent per acre? What happens to the total number of acres rented? Explain. How much tax is collected?

c) Given your answers to (b), what are the effects of the land tax on the welfare of mobile home residents (i.e. what happens to their consumer's surplus)? Be quantitative. Explain.

d) Given your answers to (b) and (c) what are the effects of the land tax on the welfare of the absentee land owners (i.e. what happens to their producer's surplus)? Be quantitative. Explain.

e) Given your answers to (b), (c) and (d) is the land market efficient after the tax is imposed (i.e. is there a deadweight loss associated with the tax)? Explain.

f) On whom does the economic incidence of the tax fall? Explain.

Reference no: EM131118554

Questions Cloud

The history of slavery and impacts contemporary life : 1 Page research on the following topic: Investigate the history of slavery and discuss the ways in which this history impacts contemporary society

Find the random variable x and what is the test statistic : Find the random variable X (remember that X is the difference between the two sample means). State the distribution you will use and why? What is the test statistic (t-value)?

Scanners and fax machines in its two divisions : Lansing Electronics Inc. manufactures a variety of printers, scanners, and fax machines in its two divisions: the PSF Division and the Components Division. The Components Division produces electronic components that can be used by the PSF Division..

Psychological traits to predict consumer behavior : In this Discussion you will take one of the survey instruments that are free from a professional consumer research company, Strategic Business Insights (SBI). The survey instrument VALSTM uses psychological traits to predict consumer behavior.

What happens to the total number of acres rented : The residents of Mobile City all live in mobile homes which they own. However, they rent land for their homes from absentee landowners. The rental supply of land is inelastic at 100 acres. How many acres are rented? Explain. What is the market rent o..

Labor market discrimination against certain workers unfairly : Two economists agree that labor market discrimination against certain workers unfairly leads to lower wages for the disfavored group. Economist X argues that government intervention is most likely necessary to eliminate this unfair treatment, Economi..

What are the obstacles within their communication : What are five strategies for Pablo, Sam, and Lifang Lin to communicate more inclusively? Format your paper consistent with APA guidelines.

Calculate the standard deviation of expected returns : EXPECTED RETURNS Stocks X and Y have the following probability distributions of expected future returns:

Determine why one should include time value of money : Determine why one should include time value of money in any financial decision. Elaborate on how this will facilitate better financial decision making.

User Account

All Pages