Find the elasticity of demand for a quantity, Microeconomics

Assignment Help:

The demand curve for gasoline is P = 200 - 10Q.  

a. Find the elasticity of demand for a quantity of 8.  Does this number imply that quantity demanded is sensitive to price changes or insensitive?  

b. Suppose the current market clearing quantity sold is 8.  The government is considering implementing an increase in the gas tax on each unit of gasoline to raise revenue.  Assume that any change in the tax is passed on entirely to consumers in higher gas prices. Why, given your findings in (a), would you argue against an increase in the tax for the purposes of increasing revenue?


Related Discussions:- Find the elasticity of demand for a quantity

#title.macro, TAKE A HYPOTHETICAL ECOMOMY AND CONSTRUCT THE CONSUMPTION SCH...

TAKE A HYPOTHETICAL ECOMOMY AND CONSTRUCT THE CONSUMPTION SCHUDEL CONTAIN 10 PAIR OF HYPOTHETICAL VALUE OF AGGERGET INCOME AND CONSUMPTOIN

Building up a stable and viable export production base, Building up a Stabl...

Building up a Stable and Viable Export Production Base: It is necessary to make a deliberate production plan and to earmark a part of production for export even if there is a

Demand and Supply, #questDuring the 1990s, technological advance reduced th...

#questDuring the 1990s, technological advance reduced the cost of computer chips. Explain, with the use of supply and demand diagrams, how the following markets are affected in ter

Objective probability, The Objective Probability -  100 explorations out...

The Objective Probability -  100 explorations out of which 25 successes and 75 failures -  Probability (Pr) of success = 1/4 and probability of failure = ¾ Given: -

Macechj, according to Tobin 1993,examples of Keynesian unemployment include...

according to Tobin 1993,examples of Keynesian unemployment includes situation where

Assignment, Please provide detailed answers, showing all your work, to all ...

Please provide detailed answers, showing all your work, to all five sections in problem 15.9 in the Nicholson and Snyder book. This is an individual take home task due at 11:59pm o

Rational decision, what is rational decision and why it requires one''s cho...

what is rational decision and why it requires one''s choices be consistent with one''s goals?

Marginal utility theory, discuss whether marginal utility is a realistic pi...

discuss whether marginal utility is a realistic piece of economy analysis in a consumer demand

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd