Show the effect of this on the market for airline travel. Shov he effect on consumers of airline travel, on the airlines and he government. Does the UK economy gain or lose as a res of the tax? Explain why. Use a diagram to support your unswer.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Question 5:
In 2019 the UK government increased the tax paid on flights
out of the UK (specifically Heathrow airport) to
approximately $300 per ticket. This tax is collected from
airline companies who use Heathrow Airport for their
operations. Source: Graham, Matt (2018). See link:
https://www.australianfrequentflyer.com.au/australian-
departure-tax/
Consider the market for airline travel. The initial market
equilibrium is at 10 million tickets sold per year at an average
price of $500 each. Then, the UK government imposes a tax
on the market, collected from sellers (the airline companies).
The tax is $300 per ticket.
Show the effect of this on the market for airline travel. Show
the effect on consumers of airline travel, on the airlines and or
the government. Does the UK economy gain or lose as a resul
of the tax? Explain why. Use a diagram to support your
answer.
Transcribed Image Text:lll ll 0 + |0:02 Question 5: In 2019 the UK government increased the tax paid on flights out of the UK (specifically Heathrow airport) to approximately $300 per ticket. This tax is collected from airline companies who use Heathrow Airport for their operations. Source: Graham, Matt (2018). See link: https://www.australianfrequentflyer.com.au/australian- departure-tax/ Consider the market for airline travel. The initial market equilibrium is at 10 million tickets sold per year at an average price of $500 each. Then, the UK government imposes a tax on the market, collected from sellers (the airline companies). The tax is $300 per ticket. Show the effect of this on the market for airline travel. Show the effect on consumers of airline travel, on the airlines and or the government. Does the UK economy gain or lose as a resul of the tax? Explain why. Use a diagram to support your answer.
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