Calculate Tax Revenue Calculate Tax Revenue document sample
Shared by: fsm71579 Department of Economics University of
Wisconsin-La Crosse ECON110 Principles of Economics Lisa
Giddings Homework 4 Due November 11th 2008 1. Number 10, Chapter
8, page 175. This chapter analyzed the welfare effects of a tax
on a good. Consider now the opposite policy. Suppose that the
government subsidizes a good: For each unit of the good sold,
the government pays $2 to the buyer. How does the subsidy affect
consumer surplus, producer surplus, tax revenue, and total
surplus? Does a subsidy lead to deadweight loss? Explain. 2.
Number 11, Chapter 8, page 175. 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 the revenue this tax raises for
Smalltown and the deadweight loss of