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Hotel rooms in a town cost $100 per night and 1,000 rooms are rented on a typical day. To raise revenue the mayor decides to
Hotel rooms in a town cost $100 per night and 1,000 rooms are rented on a typical day. To raise revenue the mayor decides to charge hotels a tax of $10 per room rented. After the tax is imposed, the going rate for hotel rooms are $108 and the number of rooms rented falls to 900. Calculate the amount of revenue the taxes raises for the town and the deadweight loss of the tax (Hint; the area of a triangle is 1/2 x base x height)
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