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

PRESENT VALUE FUTURE PAYMENTS, How does an increase in the size of a future...

How does an increase in the size of a future payment affect the present value of a future payment

Indifference curve, What is indifference curve and its properties?

What is indifference curve and its properties?

Explain the concept of budget multiplier, Problem 1: a. Use the circula...

Problem 1: a. Use the circular flow model to explain the concepts of injections and withdrawals. b. Explain the concept of budget multiplier. c. Using the concept of mult

Distinguish between of trade and the balance of trade, Distinguish among th...

Distinguish among the terms of trade and the balance of trade for a country. Definition of terms of trade a) The amount of a given amount of export goods essential to buy

Risk premium, Risk Premium - The risk premium is amount of money which ...

Risk Premium - The risk premium is amount of money which a risk averse person would pay to keep away from taking a risk. *  Risk Premium: A Scenario - The person has a 5%

Implications of failures of policy implementation, IMPLICATIONS OF FAILURE...

IMPLICATIONS OF FAILURES OF POLICY IMPLEMENTATION: Given the phenomenon of policy failures, as indicated above, one often comes across the view that places the blame for these

Changes in market equilibrium, Changes in Market Equilibrium Equilibriu...

Changes in Market Equilibrium Equilibrium prices are known by the associate level of supply and demand. Supply and demand are decided by particular values of supply & demand

Organic protons and electrons, Organic biochemistry is really as well as bi...

Organic biochemistry is really as well as biochemistry. This is because the as well as atom is the central source of all existing creature's substances. 8 protons and 8 electro

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