News Analysis: Airbnb Rentals: A New Source of Tax Revenue Back to Assignment and Study Tools Attempts 1.8 Keep the Highest 1.8 / 4 Options 2. Demand elasticity and the size of deadweight loss associated with taxation Success Tips The following graph shows the supply and demand curves for Airbnb rentals in the hypothetical economy of Luxuria 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, Luxuria was enforcing r Success Tips ax 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 Feedback levied a $15-per-room tax on Airbnb rentals. (Note. You will not be graded on your placement of this area on the graph.) 200 Supply Joy 190 Potential Tax Revenue 170 PRICE (Dollars per rental) 120 60 80 120 120 140 180 RENTALS (Rooms per day) Realizing that there is a great potential fo sed tax reve moment officials in Luxuria b ussing how they could align Airbnb rentals with hotel stays from a tax persper ard to 2018, at which time Luxuria has finally made tax arrangements with Airbnb to levy a $15-per- room tax on rentals. He e changed. More hosts have now red the Airbob market, and awareness of this hotel alternative has increased demand. The follow emand and supply curves for Airbnb rentals in 2018. Use the green ing the revenue raised by a $15-per room tax, Then use the black point (cross symbol) to shade the are berated by this tax weight Loss PRICE (Dollam pol rental) 100 120 140 er day) The demand for A only shifted to the right, but it has also behttps:/g.cengage.com/staticb/ui/evo/i Megan