Suppose a local coffee shop knows that its elasticity of demand is 0.2.
Would you recommend that the coffee shop increase its price by 20%?
Why or why not?
Suppose a cigarette manufacturer knows that its elasticity of demand is
1.3. Would you recommend that they raise price by 20%? Why or why not?
Would government be better off taxing gasoline or Nike tennis shoes?
Use the concept of elasticity (or inelasticity) of demand to defend your
Define the following:a. Consumer surplusb. Producer surplusc. Total welfared. Deadweight loss
Explain the effects of a tax on consumer and producer surplus. Explain
what happens to total welfare when government levies a per-unit tax on a
good. Use the concept of deadweight loss in your explanation.
are the two characteristics that must be met for a good to be
considered a “public good?” Give an example of the “free rider” problem
and explain why the good or service is subject to this problem.
Answer in your own words.
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