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Home / Questions / Hotel rooms in Smalltown go for $100, and 1,000 rooms are rented on a typical day. b. ...

Hotel rooms in Smalltown go for $100, and 1,000 rooms are rented on a typical day. b. The mayor now doubles the tax to $20. The price rises to $116, and the number of rooms rented falls to 800.

Hotel rooms in Smalltown go for $100, and 1,000 rooms are rented on a typical day.

 

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.

Jul 12 2021 View more View Less

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