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

TYPES OF POLLUTANTS , TYPES OF POLLUTANTS In general the air pollutants c...

TYPES OF POLLUTANTS In general the air pollutants can be sub divided into 2 catexampleories: Primary pollutants and Secondary pollutants Primary pollutants These are the poll

What is development economics, What is development economics? Traditio...

What is development economics? Traditional economics studies the allowance of scarce resources among alternative uses. Development economics seems at the economic, politica

Rational producer, In the context of managerial economics how do you explai...

In the context of managerial economics how do you explain a rational producer. Illustrate giving example covering different dimention.

Market structure, discuss the implications of various market structure for ...

discuss the implications of various market structure for price determination

Price and inflation, If the price of that cup of teh-tarik has increased in...

If the price of that cup of teh-tarik has increased in such an amount,economists may not necessarily conclude that the country is going throungh inflation.why is that so?

Explain nominal gdp, Q. Explain Nominal GDP? Nominal GDP: Nominal gross...

Q. Explain Nominal GDP? Nominal GDP: Nominal gross domestic product measures total value of all the services and goods produced and traded for money in the formal economy, eval

Agriculture, project on visit to village for agriculturebased project

project on visit to village for agriculturebased project

Long-run static equilibrium solution, (a) What  are the problems associated...

(a) What  are the problems associated with R 2 and how can adjusted R 2 solve them? (b) If the regressors  in an equation are highly correlated, which measures can be used to

Determine the productivity level of us, Determine the productivity level of...

Determine the productivity level of US Those who live in relatively poor regions of the world today have higher material living standards than their predecessors who lived in t

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