Question

4. In the market for airline tickets the equilibrium price of an airline ticket is $500 and 3 million tickets are bought and sold. The government imposes an excise tax on the sale of all airline ticket. After the tax is imposed 1.5 million airline tickets are sold; travelers pay $560 per ticket, $460 of which the airlines receive.
need help with e and f

Answer 1

C) Pes $ 500 P.2 $ 560 I Q3 mwon love Q21 1.5 million ale x 100 X 100 1100 p 0.5 -D 5X100 25 500 S 0.5 x 25 na 3 S Ŝo 7.4.17 lepl. & 4.17 utan regte 560 500 ed This sheeurs be non that the price elasticily of Lemond relatinely elastic joe, epal shows when price reses, quantly Jalls at a higher rate. 1.5m 3m this demand

eso 560 500 460 A 1.5m 3m Q to eqbre price 4 a before tax → Preno $500 3m. Aftes imposition of tox, the es ewere Shifts by the tax amount from sso to ss. Producers want to supply less due to imposition of tax fom 3m to 1.5m. The buyers price would increase pom Ko $ 'Soo to $560 and the seller would recein a teamer price for the good from 500 lô 460 Dear weyhi lors = 1x (460-560) * ( 3-.5) 2 -75 Here & ABC is the deadweight loss.