Measures of elasticity enhance our ability to study

Assignment Help Business Economics

Reference no: EM131244304

Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices (or income). This is especially important for policy, where the effectiveness of a tax depends, in part, on the elasticity of demand. We see this, for example, in the issue of “sin-taxes”, which are taxes on goods that have harmful effects, like sugar-sweetened beverages or cigarettes. Revenue from these taxes could potentially be used to reduce a budget deficit or to target spending for reducing public health costs associated with, say obesity or lung cancer. Explain the relationship between the elasticity of demand, the magnitude of consumer response, and the amount of revenue collected by the tax.

Reference no: EM131244304

Questions Cloud

Explain how each of the will affect the AD curve : Explain how each of the following will affect the AD curve (shift left, or right, or no shift), and identify in each case the specific component(s) of AD that is/are affected: (recall: components of AD are C, I, G, and NX).

Basket of goods and services that households consume : Imagine two economies. In one, economy A, technological improvements are rare, and the basket of goods and services that households consume is essentially unchanged from one year to the next.

Downloading labor market data for the most recent month : Ellen is downloading labor market data for the most recent month, but her connection is slow. So far this is all she has been able to get: Unemployment rate 5.0% Participation rate 62.5% Not in the labor force 60 million Find the labor force, the wor..

Provides data on prices and quantities of the three goods : The nation of Potchatoonie produces hockey pucks, cases of root beer, and sandals. The following table provides data on prices and quantities of the three goods in the years 2011 and 2014. Pucks Root beer Sandals Year Quantity Price Quantity Price Qu..

Measures of elasticity enhance our ability to study : Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices (or income). This is especially important for policy, where the effectiveness of a tax depends, in part, on the elasticity of..

Elasticity of demand magnitude of consumer response : Explain the relationship between the elasticity of demand, the magnitude of consumer response, and the amount of revenue collected by the tax.

Equivalent to in real terms : Given: CPI in 1988 = 116.9 and CPI in 2013 = 234.3. If the starting salary for a new MBA in 1988 was $48,000, what amount in 2013 would that be equivalent to in real terms?

Supply and demand together create the wind turbine market : Suppose we are examining the market for 240-foot industrial wind turbines. Consumers (buyers) of these wind turbines use them to generate electricity. For this analysis, we are interested in the demand for wind turbines and the supply of wind turbine..

In the solow model-population growth determines : Given: Inflation rate in Macroland was 4.5% in 2009, -2.7% in 2010, and -1.8% in 2011. Determine whether each of the following statements is true or false: In the Solow model, population growth determines:

User Account

All Pages