Question 21 Mountain View has 55 motel rooms. The motel owners are willing to re

Question

Question 21 Mountain View has 55 motel rooms. The motel owners are willing to rent a room if th ey receive $40 or Not yet answered more. The demand for motel rooms in Mountain View is given by the equation Qd-100-P, where Qg is the number of rooms demanded and P is the price of a room. Suppose the City of Mountain View imposed a motel occupancy tax of $10 per room. The tax would be imposed on motel owners. Under the tax, each Points out of 1.00 Y Flag questionowner sends $10 to the City for each room it rents oun What is the excess burden of this tax? Select one: a. $20 b. $12.5 C.$37.5 d. $25 e. $40.5

Explanation / Answer

Answer :- Option b). $ 12.5

Explanation :- Excess burden of tax = (10 + 40) * 10 / 40

= 50 * 10 / 40

= 50 * 0.25

= $ 12.5 (Option b).

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