EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 3, Problem 3.9P
a.
To determine
To show: loss in
b.
To determine
To explain: Impact on tax collection in elastic and inelastic demand scenarios when price increase is due to tax imposition on purchases.
c.
To determine
To evaluate: Excess burden of tax in case of elastic and inelastic demand.
d.
To determine
To choose: the good which government should tax.
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1. In the following, we are going to use the microeconomic theory we have developed in class to better understand
the potential impact of a rise in the price of gasoline due to a tax increase. We can use the following "constant
elasticity" demand function, Qg = BP*Y³ ,as a reasonable structure to assume for the demand for gasoline. The
reason it is named as such is that the exponents for the price (P) and income (Y), represent the price elasticity of
demand (ɛ) and price elasticity of supply (5) for all levels of each variable.
Use the formula for price elasticity of demand to confirm that the parameter ɛ, in fact, represents this
demand equation's price elasticity. Note that you would receive an analogous result if you did this for
income elasticity of demand.
b. Use the following estimated values to "calibrate" the demand function given above, that is find a
plausible value for the parameter ß based on average annual consumption, average price per gallon,
and average income. Once you…
QUESTION THREE
3.1
Discuss two (2) cases of price elasticity of demand. Use diagrams to motivate your
answer.
Explain how, using elasticity as the basis for your answer, it can be determined
whether two goods, A and good B are complement goods or substitute goods in
3.2
consumption.
QUESTION FOUR
Discuss the type of price control that can be implemented by a government to protect
vulnerable labour in a country from being exploited. Substantiate your answer with
the aid of a diagram.
This is a research-based assignment and requires evidence of research
Suppose you work for a local car parts supplier, and you’re looking at ways to increase revenue. You remember from your economics course, that people respond to price changes. You decide to test this theory. Assume, that as the price of an alternator falls from $40.00 to $38.00 the quantity of Y demanded increases from 110 to 118.
Then the coefficient of price elasticity of demand is:
If you want to increase revenue, you should:
Chapter 3 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 3.2 - Prob. 1MQCh. 3.2 - Prob. 2MQCh. 3.3 - Prob. 1TTACh. 3.3 - Prob. 2TTACh. 3.3 - Prob. 2MQCh. 3.4 - Prob. 1TTACh. 3.4 - Prob. 2TTACh. 3.5 - Prob. 1MQCh. 3.5 - Prob. 2MQCh. 3.7 - Prob. 1MQ
Ch. 3.7 - Prob. 2MQCh. 3.9 - Prob. 1MQCh. 3.9 - Prob. 2MQCh. 3.10 - Prob. 1TTACh. 3.10 - Prob. 2TTACh. 3.11 - Prob. 1MQCh. 3.11 - Prob. 2MQCh. 3.12 - Prob. 1TTACh. 3.12 - Prob. 2TTACh. 3.12 - Prob. 1MQCh. 3.12 - Prob. 2MQCh. 3.12 - Prob. 1.1TTACh. 3.12 - Prob. 2.1TTACh. 3.14 - Prob. 1MQCh. 3.14 - Prob. 2MQCh. 3.14 - Prob. 1TTACh. 3.14 - Prob. 2TTACh. 3.15 - Prob. 1MQCh. 3.15 - Prob. 2MQCh. 3 - Prob. 1RQCh. 3 - Prob. 2RQCh. 3 - Prob. 3RQCh. 3 - Prob. 5RQCh. 3 - Prob. 6RQCh. 3 - Prob. 7RQCh. 3 - Prob. 8RQCh. 3 - Prob. 9RQCh. 3 - Prob. 10RQCh. 3 - Prob. 3.1PCh. 3 - Prob. 3.2PCh. 3 - Prob. 3.3PCh. 3 - Prob. 3.4PCh. 3 - Prob. 3.5PCh. 3 - Prob. 3.6PCh. 3 - Prob. 3.7PCh. 3 - Prob. 3.8PCh. 3 - Prob. 3.9PCh. 3 - Prob. 3.10P
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