QUESTION 4 (36 pts) TOURISME CHARLEVOIX SATISFIED WITH THE NEW TAX ON LODGING (La Malbaie) Tourisme Charlevoix is satisfied with the government's decision to allow the imposition of a tax of $3 per overnight stay, which is $1 higher than the previous tax ceiling. The president, ric Desgagns, has confirmed his intention to propose this new tax on lodging in an announcement made during the Grands Prix du tourisme last Thursday. We are very happy. Currently, the tax is $2 per night. The alternative option, 3% of the price, would have been difficult to accept. Now, we have the option of a $3 tax. It won't be easy, however, because the lodging sector has a say in the process , told Mr. Desgagns. Currently, government revenues from taxation yield $625,000. With a tax of $3 per overnight stay, Tourisme Charlevoix anticipates $250,000 in additional revenues. Important note: The $3 tax on lodging amounts to an increase in the marginal cost for hotels of the Charlevoix region. Suppose the market for lodging is perfectly competitive and consider the supply to be neither perfectly elastic nor perfectly inelastic. A. If the demand for lodging were perfectly elastic, what would be the impact of the $3 tax on the price of overnight stays (Translation: nuites") compared to a situation without tax? If the impact is a price increase, indicate whether it is larger than, less than, or equal to $3. Illustrate graphically and explain the role played by the perfectly elastic demand in your answer B. If the demand for lodging were perfectly inelastic, what would be the impact of the $3 tax on the price of overnight stays (Translation: nuites) compared to a situation without tax? If the impact is a price increase, indicate whether it is larger than, less than, or equal to $3. Illustrate graphically and explain the role played by the perfectly inelastic demand in your answer. C. Actually, demand for lodging is neither perfectly elastic nor perfectly inelastic. Do you think the $3 tax will be entirely passed on to consumers? Show your reasoning graphically below and clearly indicate whether the price increase will be less than, equal to, or more than $3. D. Tourism in the Charlevoix region can be divided into two categories: sightseeing and festival tourism. Given that the demand from festival-goers is less elastic than the demand from sightseers, which tourist category will be the most affected in the sense of incurring the largest surplus loss)