What is the combination of skiing and snow-mobiling

Reference no: EM133196572

Assignment:

1. Suppose there is a market where the demand function is fairly elastic and the supply function is fairly inelastic.

a. If you impose a tax on the buyers, who will carry most of the burden of the tax, the buyers or the sellers? Please explain in words and with a graph.

2. Suppose that in market A the demand function is fairly inelastic and the supply function is fairly elastic. Suppose that in market B it is the other way around: The demand function is fairly elastic (by basically the same amount that the supply function is elastic in market A) and the supply function is fairly inelastic (by basically the same amount that the demand function is inelastic in market A).

a. Suppose you work for the government, and you would like to impose a tax of $1 on this market. If your goal is to raise as much government revenue as possible from this tax, which market should you tax and which side of the market should you tax? Please explain in words and with graphs.

3. Suppose that you like to go skiing and you also like to rent/drive snow-mobiles. The table below depicts how much satisfaction ("utility") you derive from consuming certain amounts of each of these "goods" within a week.

Skiing		Snow-mobile
Quantity	Utility	Quantity	Utility
1	500	1	600
2	850	2	1050
3	1100	3	1450
4	1300	4	1750
5	1400	5	1950
6	1450	6	2100

Suppose the price of each unit of skiing (e.g., a one-day lift ticket, equipment rental, etc) is $100, and the price of one unit of snow-mobiling (i.e., a one-day rental) is $200. Suppose your budget for the week is $1000.

a. What is the combination of skiing and snow-mobiling that maximizes your overall satisfaction for the week? Please explain your logic and how you arrived at your answer (using the concepts of marginal utility, marginal utility per dollar, etc).

b. Suppose the price of snow-mobiling increases to $300. What would be the new combination that maximizes your overall satisfaction?

Reference no: EM133196572

Questions Cloud

What the implications are to the bond market : Discus this recent event that has taken place in the financial markets and what the implications are to the bond market. Monmouth University.

How to prepare for expansion into this overseas market : What advice would you give to the project lead on how to prepare for expansion into this overseas market?

Performance between lowes and home depot : Choose a key competitor of the Lowe's. Highlight key differences in performance between Lowe's and Home Depot. University of Florida.

Identify the national unemployment rate : Visit the Bureau of Labor Statistics website and identify the national unemployment rate. How do you interpret this rate?

What is the combination of skiing and snow-mobiling : What is the combination of skiing and snow-mobiling that maximizes your overall satisfaction for the week?

Read the article slavery and the southern development : Why most of the slaves ended up on southern plantations rather than northern farms?

Discuss the optimum strategy : You must choose either Boeing or Airbus and discuss the optimum strategy.

Importance of individual contributions to innovation : Which note the importance of individual (and solitary) contributions to innovation. Michigan State University.

What is monetary theory : What is monetary theory? Explain the Equation of Exchange. What is the role of money in the macro economy? University of North Texas.

User Account

All Pages