Purchase Solution

You are the chairperson of a state tax commission

Not what you're looking for?

Ask Custom Question

4. You are the chairperson of a state tax commission responsible for establishing a program to raise new revenue through exercise taxes. Why would elasticity of demand be important to you in determining the products on which the taxes should be levied?

5. How would the following changes in price affect total revenue? That is, would total revenue increase, decline, or remained unchanged?
a. Price falls and demand is inelastic.
b. Price rises and demand is elastic.
c. Price rises and supply is elastic.
d. Price rises and supply is inelastic.
e. Price rises and demand is inelastic.
f. Price falls and demand is elastic.
g. Price falls and demand is of unit elasticity.

6. What are the major determinants of price elasticity of demand? Use those determinants and your own reasoning in judging whether demand for each of the following products is probably elastic or inelastic.
a. bottled water
b. toothpaste
c. Crest toothpaste
d. ketchup
e. diamond bracelets
f. Microsoft Windows operating system

8. What is the formula for measuring the price elasticity of supply? Suppose the price of apples goes up from $20 to $22 a box. In direct response, Goldsboro Farms supplies 1200 boxes of apples instead of 1000 boxes. Compare the coefficient of price elasticity (midpoints approach) for Goldsboroâ??s supply. Is its supply elastic or inelastic?

Purchase this Solution
Solution Summary

The solution provides very detailed instructions to answer the questions.

Solution Preview

4. Price elasticity of demand is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (holding constant all the other determinants of demand, such as income).

Elasticity of demand would be very important. You would need to select goods for which the demand was price inelastic. When demand is price inelastic, the decrease in quantity demanded as a result of the price increase caused by the excise tax is proportionately less than the increase in price. As a ...

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • How does price elasticity of demand affect taxation?

    267327 How does price elasticity of demand affect taxation? You are a chairperson of a state tax commission responsible for establishing a program to raise new revenue through exercise taxes.

  • Elasticity of Demand and taxation

    327951 Elasticity of Demand Consider this: You are chairperson of a state tax commission responsible for establishing a program to raise new revenue through excise taxes.

  • Arguments Supporting Cost over Replacement Values

    The chairman of the board of directors of the company for which you are the chief accountant has told you that he has little use for accounting figures based on cost.

  • Lancaster Lumber Supply sold $19,200 worth of treated wood t

    How much is Lancaster required to submit to the State Tax Commission on this individual sale by April 20th? Answer A. 1,083.87 (sales tax applicable to the period from April 01 to April 20) B. None of the other answers C.

  • Congress, Foreign Relations Committee, and Impeachment issues

    How much money would you make? $165,200 c. What would be the basic requirements to qualify? The representative must be 25 years old and a U.S. citizen for 7 years and a resident of the state in which they are elected. d.

  • Federal Acquisition Regulation

    The current chairperson of the Civilian Agency Acquisition council is Al Matera, of the General Services Administration.

  • Form letter to unsuccessful job candidates

    Institution's Name Street address City, State Zip Phone Date Name of Applicant Street address City, State Zip Dear (Applicant's name): Thank you very much for your interest in the position of dean of arts and sciences at (your institution's

  • Probability Questions on Funds, Elections, Pollution and Cars

    The answer of 1/120 is correct. 2. In problem #1, if members are elected to the positions of chairperson, vice chairperson, and treasurer how many different slates are possible? Out of the 10 members, you have 10 choices for chairperson.

  • Valid Contract

    184679 Describe the key elements of a valid contract The chairperson of your committee has a special project for you.

View More Related Solutions