The market for hotels in Sacramento is described by the following equations: Qd=80−P and Qs=2P−100 (a)...

The market for hotels in Sacramento is described by the following equations: Qd=80−P and Qs=2P−100

(a) What is the equilibrium price and quantity?

(b) Suppose the city places a $2 tax on hotel rooms. How much do consumers now pay? How much do producers receive? How much tax revenue is raised by the tax?

(c) Based on your answer to part (b) is supply or demand more elastic?

Expert Solution

Rahul Sunny answered 2 years ago

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