Question 6

On November 2018, there was a huge debate in Spain over who should pay the mortgagecreation tax. Should the buyers (consumers) or the sellers of the mortgage (the banks) paythe tax.

During early 2018, the civil division of Supreme Court clearly ruled that the tax on mortgagesshould be paid by consumers and not banks. However, on the 18th of October the administrative division pronounced the other way, that banks should pay.

Using the knowledge that you have learned from this course, what is your recommendationto Spanish people? Explain what do you think about their debate? does the incidence of the tax depends on who pays the tax?

Question 7

Small mom and pop firms like inner city grocery stores, sometime exist even though they do not earn economic profits. How can you explain this?

Question 8

What would the gasoline price elasticity of supply mean to UPS or FedEx?

Question 9

Consider demand for ice-cream if the price for a substitute good increases and the price for a complement good increases, can you tell for sure what will happen to the demand for ice- cream? Explain your answer.