Tax bites on travelers go deeper Travelers complain about delayed fights and poo

Question

Tax bites on travelers go deeper Travelers complain about delayed fights and poor service,but they don't seem to be too bothered by increased taxes on fights,car rentals, and hotel rooms.Taxe airport locations More municipaities are reported as taxing airpont rental customers to fund focal venues, siuch as sports stadiums and convention centes raise the average car rental bill 28 percent or more at Souroe The New York Times, Api 10, 2007 Describe the effect of these municipal taxes on car rentals at airports who do you think ?ys moroofthe tax renter or the carcoroany? The tax on car renitalstprice that renters pay ande -to price that the rental ompany receives O A. aises lowrs OC? does not darge; does not change O D. ises; raises 8o.. pays most of the tax O A elastic, the nental company

Explanation / Answer

1.

The tax on car rentals raises the price paid by renters and lowers the price received by rental companies.

the correct option is (a)

2.

The demand for car rentals is most likely inelastic so that the renters pay most of the tax.

the correct option is (d)

3.

In the long run, all inputs are variable whereas in the short run some of the inputs can be fixed.

the correct option is (b)

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