Type of traveler will bear the larger burden of the tax

Assignment Help Business Economics

Reference no: EM131094633

The government of Byngia has introduced a new tax on airline travel. Byngia has two types of travelers, business travelers and leisure travelers. Business travelers in Byngia have an elasticity of -1.2, while Byngian leisure travelers have an elasticity of -3.0. Airlines can price discriminate among these groups. Which type of traveler will bear the larger burden of the tax? Explain.

Reference no: EM131094633

Questions Cloud

Dollar appreciates in value relative to foreign currencies : If the dollar appreciates in value relative to foreign currencies

Customer additional credit to process the outstanding order : You are the manager of the Accounts Receivable department in your company and responsible for monitoring customer payments and their credit limits. You get a call from a salesman questioning why an order from one of his customers was rejected. Should..

What is the deadweight loss of the tax : Massive Products, Inc., is a monopolist whose cost of production is given by 10Q+Q^2 which means its MC=10+2Q. Demand is Q=200-2P. What price will the monopolist charge, and what profits will the monopolist earn? What will the consumer surplus be? Wh..

How should ticket prices be set to maximize revunue : The Swamp holds about 90,000 spectators. With ticket prices at $90, the average attendance is 70,000. When the ticket prices are lowered to $85, the average attendance rises to 75,000. Assuming linearity of the demand curve, how should ticket prices ..

Type of traveler will bear the larger burden of the tax : The government of Byngia has introduced a new tax on airline travel. Byngia has two types of travelers, business travelers and leisure travelers. Business travelers in Byngia have an elasticity of -1.2, while Byngian leisure travelers have an elastic..

Difference between e-commerce : Choose what you consider the most significant difference between B2B E-Commerce and B2C E-Commerce: Explain the difference using an example, and why you think it is the most significant.

What is the multiplier effect : What is the MULTIPLIER effect? How does it work? remember that we’re talking about the spending multiplier here, not the money multiplier that operates on the money and banking side of the economy)

What are the prospects of NAFTA becoming a customs union : What are the prospects of NAFTA becoming a customs union? Identify the policy changes that would be necessary and the likely political and economic obstacles to those changes taking place. What would be the major benefits and the major costs to deepe..

Customer satisfaction surveys indicate : You are the owner of a clothing retail store in Manhattan that sells brand name clothes, including high-end clothing brands. Your retail salespersons are paid a mean hourly wage of $12. Over the last several months, your sales have significantly decl..

User Account

All Pages