Requirement in secondary market for gasoline falls

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Reference no: EM137845

Q1. While we often associate informal financial arrangements with poorer countries where financial systems are less developed, informal arrangement often coexist with even the most developed financial systems. What advantages might there be to engaging in informal arrangements rather than utilizing the formal financial sector?

Q2. Because of the reduced use of main road, requirement in secondary market for gasoline falls - indeed, by 30,000 gallons per year. As we realize, there is stiff tax imposed on gasoline whereas one which existed prior to the new toll. Assuming that the marginal cost of producing gasoline is $1 per gallon, that these marginal costs are constant (i.e., the supply schedule is horizontal), that there is no outside effect from the consumption of gasoline, furthermore that the gasoline tax adds 30% to the supply value, Illustrate that there are any extra costs or benefits due to this shift? If it is so, explain how large are they?

Reference no: EM137845

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