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

Mixed economy, How solve central problem of economy in mixed economic syste...

How solve central problem of economy in mixed economic system?

How it can be possible for increases in the minimum wage, The minimum wage ...

The minimum wage was increased in 1996 amid cries by various economists that it would cause unemployment. Critics shown that the last time the minimum wage went up the si

Problems in profit measurement, Accounting profit equals revenue minus all ...

Accounting profit equals revenue minus all explicit costs, and economic. One profit is defined it should not be difficult to measure the profit of a firm for a given period. But tw

Gross national product, what is the formula for finding gross national prod...

what is the formula for finding gross national product?

Discriminatory fee structure, Discriminatory Fee Structure This method...

Discriminatory Fee Structure This method discriminates between courses and the economic condition of the family to which the student belongs. The cost of providing the educati

Illustrate the income changes and consumption choice, Illustrate the income...

Illustrate the income changes and consumption choice. Income Changes and Consumption Choice: This is of interest to see at how the consumer’s demand changes when we hold pri

Theory of cosumer behaviour - basic themes, THEORY OF COSUMER  BEHAVIOUR: ...

THEORY OF COSUMER  BEHAVIOUR: BASIC THEMES: We elaborated two classical theories (viz. Cardinal Approach and Ordinal Approach). In ordinal approach discussing the indifference

Private returns versus social returns, Private Returns Versus Social Return...

Private Returns Versus Social Returns As there is subsidisation of education by the state in all countries (and a little higher subsidisation in developing countries) it happe

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