Think about the market for parking spaces in downtown LA. There is little flexibility in terms...
- Think about the market for parking spaces in downtown LA. There is little flexibility in terms of changing the number of parking spaces provided. On the other hand, there are many substitutes for parking in the city such as taking the train or parking just outside the city and taking a bus.
If a tax is applied on parking spaces, what happens to the quantity?
- Decreases
- Increases
- Increases then decreases then increases
- No effect
- Unclear
Homework Answers
Quantity decreases, as there are many substitutes for parking in the city such as taking the train or parking just outside the city and taking bus. So, if taxes are applied on parking spaces people choose substitutes.
Therefore decreasing in quantity.
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