Question 1

Beverly is planning a summer vacation and is about to book a hotel room online for $149 a night. However, when she gets to the reservation screen, you are informed that she will be charged an additional $30 a night in various taxes that she has to pay to the hotel.

1. Between Beverly and the hotel, who is carrying the larger share of the

economic burden of the taxes?

1. What ultimately determines whether Beverly or the hotel bear the majority of the economic burden?

Question 2

Roland has started his own line of perfumes. Each of his bottles of perfume is priced $5. The table shows his supply plan with marginal cost, how many bottles of perfumes should he produce?

Bottles of Perfume	Marginal Cost ($)
1	5
2	8
3	10
4	6
5	2

Question 3

Fei, Morgan and Lakesha are all in the market for new Levi's jeans. The marginal benefits for each pair of Jeans per year for each of them is provided in the following table.

a. If the price of a pair of Levi's jeans is $32, how many pairs of jeans will each person purchase?

b. How much consumer surplus does each of them received from the last pair of jeans purchased?

c. How much consumer surplus will each of them received for each of the pairs they buy at a price of $32?

Quantity	Fei	Morgan	Lakesha
1	$85	$40	$90
2	$60	$32	$75
3	$32	$24	$55
4	$20	$16	$32
5	$15	$8	$25