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. Calculate tax revenue and deadweight loss with this larger tax. Are they double, more than double, or less than double? Explain.
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