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Suppose that the long-run price elasticity of demand for gasoline is 0.45. Assume that the price...
Suppose that the long-run price elasticity of demand for gasoline is -0.45. Assume that the price...
Suppose that the long-run price elasticity of demand for gasoline is -0.45. Assume that the price of gasoline is currently $4.00 per gallon, the quantity of gasoline is 140 billion gallons per year, and the federal government decides to increase the excise tax on gasoline by $1.00 per gallon. Suppose that in the long run the price of gasoline increases by $0.60 per gallon after the S1.00 excise tax is imposed. a. Using the midpoint formula, after the tax is...
Suppose that the long-run price elasticity of demand for gasoline is 0.40. Assume that the price ...
Suppose that the long-run price elasticity of demand for gasoline is 0.40. Assume that the price of gasoline is currently $4.00 per gallon, the quantity of gasoline is 140 billion gallons per year, and the federal government decides to increase the excise tax on gasoline by $1.00 per gallon. Suppose that in the long run the price of gasoline increases by $0.70 per gallon after the $1.00 excise tax is a. Using the midpoint formula, after the tax is imposed,...
In the long run, the tax reduces the consumption of gasoline by _____ billion gallons per...
In the long run, the tax reduces the consumption of gasoline
by _____ billion gallons per year.
(Enter your response rounded to two decimal places.)
b. The amount of tax revenue the federal government recieves
from the tax is $_____ billion.
(Enter your response rounded to two decimal places.)
c. Compared to the short-run effect of an increase in the
excise tax on gasoline, the long-run effect of an increase in the
excise tax has a _____ effect on the...
1. a) Assume the long run elasticity of demand for gasoline is -0.2 and start with...
1. a) Assume the long run elasticity of demand for gasoline is -0.2 and start with the current California price of gasoline of $4.05 per gallon. How much would we need to increase the price in order to cut gasoline use in half in the long run? b) Explain in a few sentences why you would expect the short run effect of the tax to be much less. c) Suppose the income elasticity of demand for gasoline is 0.95. How...
Consider the market for gasoline, illustrated in the figure to the right. Suppose the government adds...
Consider the market for gasoline, illustrated in the figure to
the right. Suppose the government adds a $1.50 per gallon excise
tax on gasoline, which shifts the supply curve from S1 to S2 , as
illustrated. What is tax incidence? Consumers pay $------- of the
tax and producers pay $------ of the tax. (Enter your responses
rounded to two decimal places.)
Question Help on 5.50 S2 5.00-1 4.50 4.00- G 3.50- 3.00 Price (dollars per gallon) 2.50 2.00 1.50 1.00...
Suppose the price elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long run
Suppose the price elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long run. c. If the price of heating oil rises from $1.80 to $2.20 per gallon, what happens to the quantity of heating oil demanded in the short run? In the long run? (Use the midpoint methodin your calculations.)
The demand for gasoline is represented by: P = -0.9 Qd + 8.4 The supply of...
The demand for gasoline is represented by: P = -0.9 Qd + 8.4 The supply of gasoline is represented by: P = 1.4Qs + 2.2 Quantities are in millions of gallons sold per seek. Now suppose that the government levies a $ 0.5 per unit excise tax to be paid by the sellers on each gallon. Calculate the portion of the tax paid by the sellers and enter the answer using 2 decimal places.
Suppose the demand for gasoline in the United States is Q = 500.8 - 7.8P +...
Suppose the demand for gasoline in the United States is Q = 500.8 - 7.8P + 0.027Y - 19.6MPG, where Q is annual U.S. gasoline consumption in millions of gallons per day, P is the retail price of gasoline in $/gallon, Y is real disposable income in billions of 2012 dollars, and MPG is the fleet efficiency in miles per gallon. Assume in 2015 P = 2.50, Y = 14600, and MPG = 24.7. Note that MPG is the long-run...
Suppose each of the 1 million Islandian households has the same demand curve for heating oil. How much consumer surplus...
Suppose each of the 1 million Islandian households has the same
demand curve for heating oil. How much consumer surplus would each
household lose if it had to pay $2 per gallon instead of $1 per
gallon for heating oil, assuming there were no other changes in the
household budget?
Instructions: Enter your response rounded to two
decimal places.
$ per year.
With the money saved by not subsidizing oil, by how much could
the Islandian government afford to cut each...
13. a. Would you expect the price elasticity of demand for gasoline to be -0.5 or...
13. a. Would you expect the price elasticity of demand for gasoline to be -0.5 or -2.0 in the short run? Justify your answer. b. Assume the price of gasoline is currently $3.50 per gallon. Suppose the U.S. eliminated all gasoline imports implying that quantity of gasoline sold in the U.S. drops by 20%. Using your estimate in part a., what will the new price of gasoline be? Show your work.
Suppose that the long-run price elasticity of demand for gasoline is -0.45. Assume that the price of gasoline is currently $4.00 per gallon, the quantity of gasoline is 140 billion gallons per year, and the federal government decides to increase the excise tax on gasoline by $1.00 per gallon. Suppose that in the long run the price of gasoline increases by $0.60 per gallon after the S1.00 excise tax is imposed. a. Using the midpoint formula, after the tax is...
Suppose that the long-run price elasticity of demand for gasoline is 0.40. Assume that the price of gasoline is currently $4.00 per gallon, the quantity of gasoline is 140 billion gallons per year, and the federal government decides to increase the excise tax on gasoline by $1.00 per gallon. Suppose that in the long run the price of gasoline increases by $0.70 per gallon after the $1.00 excise tax is a. Using the midpoint formula, after the tax is imposed,...
In the long run, the tax reduces the consumption of gasoline
by _____ billion gallons per year.
(Enter your response rounded to two decimal places.)
b. The amount of tax revenue the federal government recieves
from the tax is $_____ billion.
(Enter your response rounded to two decimal places.)
c. Compared to the short-run effect of an increase in the
excise tax on gasoline, the long-run effect of an increase in the
excise tax has a _____ effect on the...
Consider the market for gasoline, illustrated in the figure to
the right. Suppose the government adds a $1.50 per gallon excise
tax on gasoline, which shifts the supply curve from S1 to S2 , as
illustrated. What is tax incidence? Consumers pay $------- of the
tax and producers pay $------ of the tax. (Enter your responses
rounded to two decimal places.)
Question Help on 5.50 S2 5.00-1 4.50 4.00- G 3.50- 3.00 Price (dollars per gallon) 2.50 2.00 1.50 1.00...
Suppose each of the 1 million Islandian households has the same
demand curve for heating oil. How much consumer surplus would each
household lose if it had to pay $2 per gallon instead of $1 per
gallon for heating oil, assuming there were no other changes in the
household budget?
Instructions: Enter your response rounded to two
decimal places.
$ per year.
With the money saved by not subsidizing oil, by how much could
the Islandian government afford to cut each...
13. a. Would you expect the price elasticity of demand for gasoline to be -0.5 or -2.0 in the short run? Justify your answer. b. Assume the price of gasoline is currently $3.50 per gallon. Suppose the U.S. eliminated all gasoline imports implying that quantity of gasoline sold in the U.S. drops by 20%. Using your estimate in part a., what will the new price of gasoline be? Show your work.
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