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

Microeconomics, Ways in which the markets fail and discuss why government i...

Ways in which the markets fail and discuss why government intervention is justified and whether government intervention works or not.

Hello, using the indifference curve approach explain why the demand curve s...

using the indifference curve approach explain why the demand curve slope downwards from left to right...... is there any exceptions?

How does a firm maximize their total revenue, The definition of a price mak...

The definition of a price maker is states as “firm with some power to set the price bcoz the demand curve for its output slopes downward”, that in effect, mean those firms with a d

Financial securities, Securitization: A process in that financial relations...

Securitization: A process in that financial relationships (like loans) are converted into financial securities or assets (like bonds) that can be bought and re-sold in securities m

Marginal cost curve, "Dr. Arata Kochi, the World Health Organisation malari...

"Dr. Arata Kochi, the World Health Organisation malaria chief,... [says that] eradication is counterproductive. With enough money, he said, current tools like nets, medicines and D

Finding concavity, my q is dat how can we find mathematically dat a product...

my q is dat how can we find mathematically dat a production function is concave?

Capital intensive operations, Where minimum efficient scale is very huge fo...

Where minimum efficient scale is very huge for capital intensive operations, it may be more cost effective to allow one company to spread its fixed costs over a very huge number of

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