2. Demand elasticity and the size of deadweight loss associated with taxation The following graph shows the supply and demand curves for Airbnb rentals in the hypothetical economy of Hosttown in 2010, two years after Airbnb launched; the equilibrium quantity of rentals was 80 rooms per day, and the equilibrium price was $140 per room. At that time, Hosttown was enforcing tax regulations on the market for hotels, but it hadn't yet initiated a tax arrangement on room rentals through Airbnb. On the following graph, use the green rectangle (triangle symbols) to indicate the tax revenue the government could have collected in 2010 if it had levied a $30-per-room tax on Airbnb rentals. (Note: You will not be graded on your placement of this area on the graph.) 200 Demand d2010 Supply 2010 190 Potential Tax Revenue 80 180 170 PRICE (Dollars per rental) 130 30 140 40 150 80 160 20 120 10 110 80 100 0 20 40 60 + 80 100 120 140 RENTALS (Rooms per day) 160 180 680 200 (?)