Intro to Micro Economics Suppose that in Canada Ihc government places a $1,500 t

Question

Intro to Micro Economics

Suppose that in Canada Ihc government places a $1,500 tax on the sellers of new snowmobiles. After the sale of a new snowmobile, a seller must pay the government $1.500. How would the imposition of the tax on sellers affect market price of snowmobiles? The price will increase by $1,500. The pnee won't change. The pnee will increase by more than $1,500. The price will increase by less than $1,500. Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic. She argues "I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor. If I wanted to buy a mystery novel I would have many authors to choose from. Therefore, the demand for mystery novels is more elastic than the demand for my textbook." Is Jill correct? the demand for the textbook is more inelastic, but Jill's reasoning ts incorrect. The reason the textbook has an inelastic demand is that it is more expensive than any novel. She is confused. She should have concluded that the textbook has a more elastic demand than a novel. She is correct. She is correct that the textbook has a more inelastic demand, but that is because most students pay for their textbooks with credit or debit cards. Most people pay for novels and other books with cash or by check.

Explanation / Answer

2.a)the price will increase by 1500.

3.c)she is correct

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