question archive Hotel rooms in smalltown go for $100 and 1000 rooms are rented on a typical day
Hotel rooms in smalltown go for $100 and 1000 rooms are rented on a typical day
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Hotel rooms in smalltown go for $100 and 1000 rooms are rented on a typical day.
a.To raise revenue the maypr decides to charge tax of $10 per rented room. After the tax is levied the going rate for hotel rooms rises to $108 and the number of rooms rentedfall to 900.Calculate the amount of revenue this rax raises for small town.and the deadweight loss of the tax.
b.The mayor now double the tax to $20.The price rises to $116 and the number of rooms rented fall to 800. Calculate the tax revenue and deadweight loss with this larger tax.Do they double or less than double.Explain.
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