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Please help me find the right steps to this complicated problem. TYIA. Suppose the government wants to estimate the ta}: revenues from room rentals for
Please help me find the right steps to this complicated problem. TYIA.
Suppose the government wants to estimate the ta}: revenues from room rentals for 2030, and economic models predict two different scenarios {A and B), each with a different demand curve {labeled Demand; and Demandg, respectively, on the following graph). Use the objects to the n'ght of the graph to help you determine the notentfa.r deadwefght toss and revenues generated by the same $40 tax in 2030 under each scenario and enter these values into the foffowa'ng tabFe. (Note: You was not be graded on your placement of any of the objects on the graph.) zoo m \\ .;.~- liternandA Tax Revenue so 2 m M E E Demand . E 130 E Deaowelght Loss 3 E 2 so 3 U 14o Lu + 9 E so 12o 10 no o no 12o 1so 24o zoo 33o 42o 430 54o ouo RENTALS (Rooms per day] Deadweig ht Loss Tax Revenue Scenario (Dollars per day) (Dollars per day) A:: 3:: Under scenario A, demand is relatively v elastic, and the tax results in a v deadweight loss and v government revenue than under scenario B. This suggests thatr all other things being equal, the government should tax industries with a relatively v elasticity of demand if it wants to minimize deadweight lossStep by Step Solution
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