Gasoline is inelastic and supply is relatively elastic

Assignment Help Business Economics

Reference no: EM13978293

Assume that the demand for gasoline is inelastic and supply is relatively elastic. The government imposes a sales tax on gasoline. The tax revenue is used to fund research into clean fuel alternatives to gasoline, which will improve the air we all breathe. a. Who bears the greater burden of this tax, consumers or producers? Briefly explain. b. Is this tax based on the benefits principle or the ability-to-pay principle? Explain.

Reference no: EM13978293

Questions Cloud

Total savings by contributors to IRAs increased : From 1983 to 1987, a period of rapid economic growth in the U.S., total savings by contributors to IRAs increased by approximately the amount of their IRA contributions. Does this show that virtually all of their IRA savings were “new” savings—money ..

Countries with higher personal saving rates tend : Countries with higher personal saving rates tend also to have higher rates of business investment and capital accumulation. Explain why this fact does not provide a justification based on social efficiency for policies that increase U.S. personal sav..

What values would be assigned to ending inventory and cost : If Devine uses the first-in, first-out (FIFO) inventory method (periodic approach), what values would be assigned to ending inventory and cost of goods sold? How much is gross profit? If Devine uses the last-in, first-out (LIFO) inventory method (per..

Advertising for loans : Arrows up or down. In the application on consumer loans in South Africa, the loan uptake rate _________ as the interest rate decreased and _________ when the model on the offer was switched from a man to a woman. Advertising for Loans. Consider the n..

Gasoline is inelastic and supply is relatively elastic : Assume that the demand for gasoline is inelastic and supply is relatively elastic. The government imposes a sales tax on gasoline. The tax revenue is used to fund research into clean fuel alternatives to gasoline, which will improve the air we all br..

The firm makes a profit and pre-tax profit : A firm makes and sells a computer for $1000. The variable cost to produce a computer, for the range of production of the firm, is $3000 per unit. The total fixed costs per year to make the computer are $4.0 million. How many computers must be made an..

According to conventional analysis- about consumer behavior : According to conventional analysis, all consumer decisions are made with just a few assumptions about human behavior, given these, the consumer is then said to maximize their utility. Explain this concept and the process. How does the heterodox persp..

What is the final temperature : A copper vessel of mass 1000gm contains 500 gm of water at 50 degrees Celsius. An ice cube of mass 100 gm at temperature -30 degrees Celsius is dropped into this vessel. Does the ice melt? What is the final temperature?

Consumer is unable to distinguish between two firms products : A risk-neutral consumer is deciding whether to purchase a homogeneous product from one of two firms. One firm produces an unreliable product and the other a reliable product. At the time of the sale, the consumer is unable to distinguish between the ..

User Account

All Pages