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1. Hotel rooms in Smalltown go for $100, and 1,000 rooms are rented on a typical day. a. To raise revenue, the mayor decides to charge hotels a tax of $10 per rented room. After the tax is imposed, the going rate for hotel rooms rises to $108, and the number of rooms rented falls to 900. Calculate the amount of revenue this tax raises for Smalltown and the deadweight loss of the tax. (Hint: Draw a graph with supply and demand curves!) 82-89-0 (se)nobaghal (H) qurg ads no noilsgim to oleving (Isnigisin) (Stoga od bluodle doum wor botnghi daszy odi no noitsgin to 1:00 Isisce (innigram) od wad d Isiooz or wi b. The mayor now doubles the tax to $20. The price rises to $116, and the number of rooms rented falls to 800. Calculate tax revenue and deadweight loss with this larger tax. Are they double, more than double, or less than double? Explain. folagini 2.2.U odi lliw aston yosm woll a

1. Hotel rooms in Smalltown go for $100, and 1,000 rooms are rented on a typical day. a. To raise revenue, the mayor decides to charge hotels a tax of $10 per rented room. After the tax is imposed, the going rate for hotel rooms rises to $108, and the number of rooms rented falls to 900. Calculate the amount of revenue this tax raises for Smalltown and the deadweight loss of the tax. (Hint: Draw a graph with supply and demand curves!) 82-89-0 (se)nobaghal (H) qurg ads no noilsgim to oleving (Isnigisin) (Stoga od bluodle doum wor botnghi daszy odi no noitsgin to 1:00 Isisce (innigram) od wad d Isiooz or wi b. The mayor now doubles the tax to $20. The price rises to $116, and the number of rooms rented falls to 800. Calculate tax revenue and deadweight loss with this larger tax. Are they double, more than double, or less than double? Explain. folagini 2.2.U odi lliw aston yosm woll a

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Application: The Cost Of Taxation
Section: Chapter Questions
Problem 9PA
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1. Hotel rooms in Smalltown go for $100, and 1,000 rooms are rented on a typical day. To raise revenue, the mayor decides to charge hotels a tax of $10 per rented room. After the tax is imposed, the going rate for hotel rooms rises to $108, and the number of rooms rented falls to 900. Calculate the amount of revenue this tax raises for Smalltown and the deadweight loss of the tax. (Hint: Draw a graph with supply and demand curves!) 82-89-0 (2916)nobisginal at 9708 910m Suro sdw uilt) dosry ads no noitsgimi to 1200 steving (Isnighsm) silt werd (Sinaga od bluore four work botngini sigsig sdt no notagim to 1200 lsiooe (lenignem) or werd d b. The mayor now doubles the tax to $20. The price rises to $116, and the number of rooms rented falls to 800. Calculate tax revenue and deadweight loss with this larger tax. Are they double, more than double, or less than double? Explain. Tolagmi roma22.U odi lliw aston yosm woll 12.0
Transcribed Image Text:1. Hotel rooms in Smalltown go for $100, and 1,000 rooms are rented on a typical day. To raise revenue, the mayor decides to charge hotels a tax of $10 per rented room. After the tax is imposed, the going rate for hotel rooms rises to $108, and the number of rooms rented falls to 900. Calculate the amount of revenue this tax raises for Smalltown and the deadweight loss of the tax. (Hint: Draw a graph with supply and demand curves!) 82-89-0 (2916)nobisginal at 9708 910m Suro sdw uilt) dosry ads no noitsgimi to 1200 steving (Isnighsm) silt werd (Sinaga od bluore four work botngini sigsig sdt no notagim to 1200 lsiooe (lenignem) or werd d b. The mayor now doubles the tax to $20. The price rises to $116, and the number of rooms rented falls to 800. Calculate tax revenue and deadweight loss with this larger tax. Are they double, more than double, or less than double? Explain. Tolagmi roma22.U odi lliw aston yosm woll 12.0
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