How does the elimination of the tax affect the wages

Reference no: EM131130227

Cutting the Hotel Tax. Suppose your city initially has a $20-per-night tax on hotel rooms, paid in a legal 21.5 sense by the hotel. Under the tax, the equilibrium price of hotel rooms is $80 per night. (Related to Application 3 on page 455.)

a. Draw a supply-demand graph to show the effects of eliminating the tax.

b. How does the elimination of the tax affect the equilibrium price of hotel rooms?

c. How does the elimination of the tax affect the wages of hotel workers?

d. Is the change in the price greater than, less than, or equal to $20? Why?

Reference no: EM131130227

Questions Cloud

Why increasing financial leverage increases the risk borne : Explain why increasing financial leverage increases the risk borne by shareholders. Explain how a company can incur costs of financial distress without ever going bankrupt. What is the nature of these costs?

The organization and all subsidiaries or strategic business : Name of the organization and all subsidiaries or strategic business units. Historical perspective on the organization.

How do we ensure optimal health for loretta : How do we ensure optimal health for Loretta and ensure she stays at home for as long as possible?" What strategies can a Registered Nurse initiate to maintain optimal health for Loretta, and what support services would keep her at home and ..

Review essay request to conduct research : Review this essay "Request to conduct research" .- check grammar, punctuation, sentence or paragraph organized,

How does the elimination of the tax affect the wages : How does the elimination of the tax affect the wages of hotel workers?

Explain the effects of human activities on your community : Explain The effects of human activities on your community and the biosphere and how this has led to your chosen issue.

Explain how you determine credibility and appropriateness : Post a response of approximately 350-500 words in which you explain how you determine the credibility and appropriateness of a resource for an audience. Describe the criteria you use to evaluate candidate resources for your own expert consideratio..

Project to arrange for conference : The table for this assignment provides best case, most typical case, and worse case estimates of task duration for each task. Using the PERT Beta distribution formulas, compute the expected time for achieving each task and its standard deviation.

Show the effects of the tax on the housecleaning market : Suppose that firms continue to keep $1 per hour for administrative costs. Predict the new wage. e. Who bears the bulk of the housecleaning tax, wealthy households or poor ones?

User Account

All Pages