Econsss

ASSIGNMENT 2 Price cinch of Demand is a whole step on how much bill demanded of goods responds to the change in equipment casualty (Mankiw, 2009).The concept of centering allows us to analyse demand and render with greater precision. There are 3 types of Price Elasticity of demand Elastic, Inelastic and Unit Elastic. Price elasticity of demand is elastic when the good is luxury, consumer has more time to ready to a price change, market is narrowly defined and has underweight substitute (Mankiw, 2009). It was computed as the percentage change in quantity demanded over the percentage change in price (Mankiw, 2009). The alliance between valuateation, elasticity and government revenue can be explained when the government impose measure on a good. In order to development the government revenue, they impose tax on goods with relatively inelastic demand. A tax will increase the price of goods and increase the Government tax revenue (Mankiw, 2009) An example of harvest-time not likely to be taxed to raise revenue is railcar. Automobile is categories as luxury goods, thus it is relatively elastic demand.

If tax imposed on Automobile, the price will increase which hold to piece of decrease in quantity demanded larger compared to Percentage of increase in Price. As a result, the Tax Revenue here will decrease. Thus, the government should not impose tax on Automobile if they planned to raise the revenue. Supply Supply confident(p) Tax Price 0 Price without tax Seller Received Buyers Pay Qd with tax Qd before tax applied Quantity Supply Supply positive Tax Demand Price Quantity Qd before tax applied Qd with tax 0 Seller Received Price without tax Buyers Pay Demand Elastic DIAGRAM 1... If you want to get a full essay, order it on our website: Ordercustompaper.com

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