Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

a. If the demand is perfectly inelastic and supply is perfectly elastic. If a tax is imposed, who is going to bear the burden of

a. If the demand is perfectly inelastic and supply is perfectly elastic. If a tax is imposed, who is going to bear the burden of the tax? The buyers or the sellers, and what will happen to the equilibrium quantity? Support your answer with words and graph. 

b. Three months before the final exam your land lord sent you a letter stating that your monthly rent will double, effective immediately. What would you do in this case? Analyze your situation citing the concept of price elasticity of demand in the short run and the long run. 

c. Good X and Y have a price elasticity of demand of 2.2 and 0.67 respectively. If the price of both goods decrease by 1% what happens to total expenditure for each good? Explain. 

d. As average household income in Canada increases by 10%, annual sales of Honda increases from 56000 to 67000. Name and calculate the kind of elasticity and state if it is elastic, or inelastic.

Step by Step Solution

3.35 Rating (161 Votes )

There are 3 Steps involved in it

Step: 1

a Suppose if demand is perfectly inelastic and supply is perfectly elastic the whole money burden of ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Economics

Authors: Roger A. Arnold

12th edition

978-1305758674, 1305758676, 978-1285738321

More Books

Students also viewed these Economics questions

Question

Value 2 3 4 6 7 8 9 10 11 12 Frequency 3 4 6 3 2 3 4 4 4 2

Answered: 1 week ago