Which group would support a regulatory policy

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Reference no: EM131402186

There's a gas shortage in Gasland. You're presented with two proposals that will achieve the same level of reduction in the use of gas. Proposal A would force everybody to reduce their gas consumption by 5 percent. Proposal B would impose a 50-cent tax on the consumption of a gallon of gas, which would also achieve a 5 percent reduction. Consumers of gas can be divided into two groups-one group whose demand is elastic and another group whose demand is inelastic.

a. How will the proposals affect each group?

b. Which group would support a regulatory policy?

c. Which would support a tax policy?

Reference no: EM131402186

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