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 response to price changes, which means the coefficient 7.8 captures just the short-run response to price changes.
What is the point income elasticity of demand?
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Suppose the demand for gasoline in the United States is Q =
500.8 - 7.8P +...
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,...
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 $1.00 excise tax is imposec. a. Using the midpoint formula, after the tax is...
Q.2 (15 points) The following table shows the demand for gasoline by a public bus and...
Q.2 (15 points) The following table shows the demand for gasoline by a public bus and the demand for gasoline by a private car. Price (per gallon) Demand for gasoline (per week) Quantity demanded by a Quantity demanded by a private public bus (gallons) car (gallons) S3.2 75 25 $3.0 80 40 $2.8 85 55 $2.6 90 70 95 85 $2.2 100 100 (a) Suppose the price of gasoline increases from $2.4 to $2.6. Calculate the price elasticity of demand...
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...
2. Suppose household annual demand for gasoline follows the equationQD = 2000 – 500P + 25I...
2. Suppose household annual demand for gasoline follows the equationQD = 2000 – 500P + 25I where P is the price of a gallon of gasoline and I is household income in 1000s of dollars.Suppose that P = 3 and I = 60.What quantity of gasoline will households demand at this price and income level?__________What is the income elasticity of demand for gasoline at this price, income, and quantity level?__________What happens to the income elasticity of gasoline demand if I...
0.2 (15 points) The following table shows the demand for gasoline by a public bus and...
0.2 (15 points) The following table shows the demand for gasoline by a public bus and the demand for gasoline by a private car. Price (per gallon) $3.2 $3.0 $2.8 $2.6 $2.4 $2.2 Demand for gasoline (per week) Quantity demanded: by a Quantity demanded: by a public bus (gallons) private car (gallons) 75 25 80 40 85 55 90 70 95 85 100 100 (a) Suppose the price of gasoline increases from $2.4 to $2.6. Calculate the price elasticity of...
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...
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...
You are given the following data on P and O for gasoline both before and affer the imposition of a per gallon tax...
You are given the following data on P and O for gasoline both before and affer the imposition of a per gallon tax on producers in the local market for gasoline Q 40 gallons -35 gallons -$3/gallon $4/gallon Before the Tax After the Tax Part C: Using this elastioity value, fit the given data instead into a demand function of the constant elasticity form Using this elasticity value, the constant elasticity demand function would be OA QD 48.46 P-1 B....
7. Suppose the inverse demand equation for rental apartments is P = 2000 – Q and...
7. Suppose the inverse demand equation for rental apartments is P = 2000 – Q and the inverse supply equation for rental apartments is P=Q. Suppose there's a policy that restricts the price (monthly rental) to not exceed $1200. Which of the following statement is correct? A. The market equilibrium price will be $1200. B. There will be no excess demand or excess supply. C. There will be an excess demand of 400 units. D. There will be an excess...
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,...
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 $1.00 excise tax is imposec. a. Using the midpoint formula, after the tax is...
Q.2 (15 points) The following table shows the demand for gasoline by a public bus and the demand for gasoline by a private car. Price (per gallon) Demand for gasoline (per week) Quantity demanded by a Quantity demanded by a private public bus (gallons) car (gallons) S3.2 75 25 $3.0 80 40 $2.8 85 55 $2.6 90 70 95 85 $2.2 100 100 (a) Suppose the price of gasoline increases from $2.4 to $2.6. Calculate the price elasticity of demand...
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...
0.2 (15 points) The following table shows the demand for gasoline by a public bus and the demand for gasoline by a private car. Price (per gallon) $3.2 $3.0 $2.8 $2.6 $2.4 $2.2 Demand for gasoline (per week) Quantity demanded: by a Quantity demanded: by a public bus (gallons) private car (gallons) 75 25 80 40 85 55 90 70 95 85 100 100 (a) Suppose the price of gasoline increases from $2.4 to $2.6. Calculate the price elasticity of...
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...
You are given the following data on P and O for gasoline both before and affer the imposition of a per gallon tax on producers in the local market for gasoline Q 40 gallons -35 gallons -$3/gallon $4/gallon Before the Tax After the Tax Part C: Using this elastioity value, fit the given data instead into a demand function of the constant elasticity form Using this elasticity value, the constant elasticity demand function would be OA QD 48.46 P-1 B....
7. Suppose the inverse demand equation for rental apartments is P = 2000 – Q and the inverse supply equation for rental apartments is P=Q. Suppose there's a policy that restricts the price (monthly rental) to not exceed $1200. Which of the following statement is correct? A. The market equilibrium price will be $1200. B. There will be no excess demand or excess supply. C. There will be an excess demand of 400 units. D. There will be an excess...
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