Price Elasticity of Demand

A county government has decided that it needs to generate more revenue to pay for repaving all of the roads in the county. County officials have decided that the best way to generate more revenue is to raise the tax on restaurant meals. Explain whether this tax is likely to be effective at generating revenue for the county. Be sure to identify, define, and explain any Economic concepts you use in answering this question.

Perfect Competition

When corn prices in the U.S. increased by almost 75% from 2010 to 2012, the number of acres planted in corn increased by over 9 million acres. When corn prices decreased by about 30% from 2012 to 2014, corn average decreased by over 5 million acres. Using your Good Economic Sense and Supply-Demand analysis, explain why the number of acres planted in corn changes. (Use short-run and long-run effects)