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1. The town of Sunnyside is a popular tourist destination. The problem is, the tourists are not always considerate of the beautiful landscapes in and
1. The town of Sunnyside is a popular tourist destination. The problem is, the tourists are not always considerate of the beautiful landscapes in and around Sunnyside. Cleanup efforts cost Sunnyside $5005 a day. The town has decided that it would be only fair to nance this by a \"bed tax\"a per-roompernight tax on every occupied tourist accommodation room. Denote this tax (in dollars per room per night) by t. Sunnyside has many small hotels, guest houses, and B&Bs. The providers of these (\"hoteliers\") can all be assumed to be in perfect competition with each other, and they are all similar enough that tourists consider them perfect substitutes. The demand function for rooms is Q D (p) = 700 513, where (2;; is the number of rooms demanded and p is the price per room per night in dollars. The marginal cost of providing a room is c = $50 per night, 60% of Which is labor costs (accruing to the workers of Sunnyside). The total number of rooms available is xed at a = 400 (this cannot be expanded in the time horizon considered in this problem). ((1) Who actually pays for the cleanup when it is nanced by this tax? Answer by comparing each of the following before and after the tax is put in place: (i) the consumer surplus of the tourists, (ii) the prot of the hoteliers, and (iii) the labor income of the hotel / guest house workers
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