Question
The demand for Airbnb rooms has not only shifted to the right, but it has also become relatively more elastic since 2000. Comparing the
The demand for Airbnb rooms has not only shifted to the right, but it has also become relatively more elastic since 2000. Comparing the market for Airbnb rentals for the two years is complicated by the fact that the graph depicts three changes: total demand increases, total supply increases, and the slope of the demand curve changes. To isolate the effect of elasticity on deadweight loss and government revenue, consider the following scenario: Suppose the government wants to estimate the tax 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 Demandy, respectively, on the following graph). A-Z Use the objects to the right of the graph to help you determine the potential deadweight loss and revenues generated by the same $30 tax in 2030 under each scenario and enter these values into the following table. (Note: You will not be graded on your placement of any of the objects on the graph.) bonge per rental) 200 190 180 Demand 170 160 Demand "A Tax Revenue Deadweight Loss (?)
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