Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 20, Problem 10E
To determine
To explain:
The reason a 40 percent across-the board tax on businesses will harm the consumers.
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Students have asked these similar questions
Who does elasticity matter to the most? The government, the firm/business, or the individual/consumer.
Price elasticity of demand estimates come up often when taxes are being placed on goods. Why do you think knowing the price elasticity of demand is important for policy? Despite large taxes on cigarettes (and the predicted decrease in consumption), the tobacco industry has seen steadily rising profits. What can explain this? What do you think would happen to the price elasticity of demand as e-cigarettes become more popular and available?
Imagine you are a bank manager. Currently, your bank holds $8 million in deposits at a 4% interest rate. However, you need to increase the total deposits to $10 million. The interest rate elasticity of savings is 40.
What interest rate should you offer to depositors to obtain the required amount, all other things being equal?
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- Who would pay a tax imposed on the supplier when the price elasticity of supply is inelastic and the price elasticity of demand is elastic?arrow_forwardprice that will result in 15 percent rise in its demand.arrow_forwardYour Best Brand Bike Shorts - BBB Shorts have been flying off the shelf. Your chief economist tells you that during the Covid-19 pandemic, "the taste for bicycling has changed. The price elasticity of demand is much more inelastic. The price elasticity of demand has decreased from -5.76 to -2.70." Before the campaign, your price was $240 per pair of BBB Shorts. What should the new price be? Please enter the new price here: $ [a] Show only your answer in the box. Do not include steps in the calculation and do not include the dollar sign.arrow_forward
- Your Best Brand Bike Shorts-BBB Shorts have been flying off the shelf. Your chief economist tells you that during the Covid-19 pandemic, "the taste for bicycling has changed. The price elasticity of demand is much more inelastic. The price elasticity of demand has decreased from -5.76 to -2.70." Before the campaign, your price was $240 per pair of BBB Shorts. What should the new price be? Please enter the new price here: $arrow_forwardYour Best Brand Bike Shorts - BBB Shorts have been flying off the shelf. Your chief economist tells you that during the Covid-19 pandemic, "the taste for bicycling has changed. The price elasticity of demand is much more inelastic. The price elasticity of demand has decreased from -5.76 to -2.70." Before the campaign, your price was $240 per pair of BBB Shorts. What should the new price be? Please enter the new price here: $ [a] Show only your answer in the box. Do not include steps in the box and do not add the dollar sign.arrow_forwardYour Best Brand Bike Shorts-BBB Shorts have been flying off the shelf. Your chief economist tells you that during the Covid-19 pandemic, "the taste for bicycling has changed. The price elasticity of demand is much more inelastic. The price elasticity of demand has decreased from -5.76 to -2.70." Before the campaign, your price was $240 per pair of BBB Shorts. What should the new price be?arrow_forward
- Why may a company intentionally limit supply when consumers want more of a product?arrow_forwardWhat would happen if a product with strong demand had a minimum price that may be charged?arrow_forwardIdentify a product or service for which you use on a regular basis. Discuss the product/service in terms of the Law of Demand from your perspective as the customer and consumer of the item. How does price impact your quantity demanded? In other words, what is your change in quantity demanded as a result in an increase or decrease in the product’s price? What are some shift factors of demand (anything other than price) that can adjust your overall demand for the product?arrow_forward
- Answer the following questions: What product do you use that you would use regardless of the price? Why? Is this related to price elasticity of demand, or is it personal preference? Provide the URL for this product so we can learn more about it.arrow_forwardHOW DO YOU RESPOND TO PRICE ELASTICITY? People have unlimited needs and wants for their personal satisfaction and because of that the prices of products easily get changed. Everyone is affected with the new normal in the market. The prices of products have become very expensive since the outbreak of the pandemic, not only in our locality, but in the whole world. If your income or the income of your family is not enough to purchase the basic commodities needed by your family, what goods would you buy, instead? What economic or marketing strategies would you apply? How would you respond to the price changes of these commodities?arrow_forwardYou were gifted a box of 50 thermos bottles that you do not need and you plan to sell them on Ebay. You were initially thinking of asking for $20 per bottle, but then you found out that demand is elastic at $20. Should you lower your asking price? Yes, because when demand is elastic, a lower price increases revenue. Yes, because when demand is inelastic, a lower price increases revenue. No, because when demand is inelastic, a lower price increases revenue. No, because when demand is elastic, a higher price increases revenue.arrow_forward
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