You are Lori Lightfoot. The city needs money. You are contemplating 2 sources of revenue: levying a tax on gas in Chicago at $.50/ gal, and/or increasing the CTA fare. The 2 demand schedules are as follows. Gas price Gallons demanded (in millions) CTA fare Number of rider (one way) (in millions) $4.50 1 $2.00 6. 4.00 1.1 1.75 8 3.50 1.2 1.50 10 3.00 1.3 Answer the following questions 1. Are the 2 demand curves straight lines? Is the elasticity constant on each curve at each price? If so, what is it? If not, what is it? 2. Is one strategy better than the other (just from a money perspective)? Why? Does it depend on where the tax/fare is instituted? 3. From what you know of elasticity and the real world, is raising the price the best policy Given your answer, do all consumers share equally in the tax? Your answers should be complete enough to answer each question.

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4. What do you think would be the effect on the equilibrium price and quantity of marijuana as a result of its consumption being legalized? Give reasons for your answer.

1. In 2020 due to state deregulations ride sharing company X managed to lower its price which led to higher quantity demanded of their rides (a movement along the demand curve). The accompanying table describes what happened to prices and the quantity demanded of their service. Using the midpoint method, calculate the price elasticity of demand for the rides. 2008 2012 Quantity demanded (rides) 130 million 420 million Average price (per ride) $25 $15

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A sales tax is imposed on good A. The supply of good A is not perfectly elastic or perfectly inelastic. Suppose that the demand for good A becomes more inelastic. (a) Will the tax burden on sellers increase or decrease? (b) Will the DWL increase or decrease?

What is the price elasticity of demand(Using the Midpoint method) when the price changes from $10 to $13? If the Government imposes a tax of $6 per burrito, how many burritos will be sold in the market?

Traffic fee The graph below shows the daily demand for entry into the downtown core of a major city by commuter vehicles and shoppers' vehicles if they were required to pay a special traffic fee in order to enter. a. Draw the total demand curve. Plot only three points of the curve. 14 12 10 4 Commuters Shoppers Tools 0 6 12 18 24 30 36 42 Number of vehicles per day (tens of thousands) Total demand b. Assuming that there is no charge for entry, what is the total number of vehicles entering downtown? (Give your answers in tens of thousands of vehicles.) Quantity of vehicles: c. Suppose that government, in an effort to reduce the number of vehicles by 50 percent, decides to impose a traffic fee (the same fee for both commuters and shoppers) for entry into the downtown area. What will be the amount of the fee, and how many of each group will enter downtown? Fee: $ Number of commuter vehicles: Number of shoppers'vehicles: [ оп d. Assume that government, alternatively, decides to have a…