The city of Regina wants to increase their revenues. Some alternatives are being discussed in the...

The city of Regina wants to increase their revenues. Some alternatives are being discussed in the city Council. The city asks you for your advice knowing of your knowledge in microeconomics. The alternative with more support is the implementation of a tax on food delivery (assume that this tax adopts the form of an excise tax, which is a fixed value in dollars per unit sold; for instance $4 dollars per delivery). The Council knows that demand for food delivery has increased during the pandemic and wants to take advantage of this for revenue purposes. However, some questions in the Council remains unanswered and they want your help to understand the potential implications of this policy.

The Council has not decided whether to charge the tax on buyers or sellers. Assuming that the market for food delivery shows normal conditions (like the markets in the lectures), what would your recommendation be? Show it graphically.

The Council does not know much about the demand for food delivery. You identify this as a problem and decide to present two cases for the Council to consider: 5.2.1) the case of an elastic demand, and 5.2.2) the case of an inelastic demand. What can you teach the Council by introducing these two cases into the discussion? Show it graphically.

What can we learn from the two cases in 5.2 in relation to the revenues collected for the city? What would your suggestion be?

Suppose the Council knowing that the demand for food delivery has steadily increased during the last months (and assuming that this pattern will continue for at least two more years) decides to put on the discussion table the option of a large tax rate (i.e., size of the tax). This idea makes you nervous because you know that the purpose of the tax is to increase the city’s revenues. Why would you be nervous? (Hint: show graphically the effect of three different tax sizes and consider market conditions like those in 5.1).

Expert Solution

Rahul Sunny answered 1 year ago

what are alternatives to a triditional job in your city?

Regina Golden, the vice president of sales for Tropical Pools and Spas, wants the company's credit...

Regina Golden, the vice president of sales for Tropical Pools and Spas, wants the company's credit department to be less restrictive in granting credit. “How can we sell anything when you guys won't approve anybody?” she asks. Discuss the pros and cons of easy credit. What are the accounting implications?

Delta airlines: Strategic alternatives: (also discussed advantages/disadvantages).

Barney owns a bagel business in New York City and he wants to increase his total...

Barney owns a bagel business in New York City and he wants to increase his total revenue. He knows that, when bagels are $1, he sells 250 an hour, and when he lowers the price to $0.75, he sells 275 an hour. A) Using the midpoint method, compute the price elasticity of demand for Barney’s bagels. (show formula and all your calculations) B) Based on your answer to section A, is demand for Barney’s bagels elastic or inelastic? How do...

The town hall of a city wants to open some recreational centers. It has been analyzed...

The town hall of a city wants to open some recreational centers. It has been analyzed 3 options. The opening cost and the capacity of each center are listed below. Option Capacity Cost A 150 15000 B 250 50000 C 120 36000 The selected recreational centers must be hosting the students from 5 schools. In the table below is summarized the number of students at each school. School 1 2 3 4 5 Students 50 80 40 60 40 Each...

What is profit? There is accounting profit discussed in the textbook: profit = total revenues –...

What is profit? There is accounting profit discussed in the textbook: profit = total revenues – explicit costs Let me relate profit to the factors of production. The three factors of production according to the textbook are land, labor, and capital. Let me add a fourth factor found in many economics textbooks: a return to the entrepreneur! (Entrepreneurs provide two services to society: organize resources and assume risk.) So how does a firm or entrepreneur maximize its profits? The answer...

What are some alternatives to Kohlberg’s theory?

A firm is examining some alternatives to invest their money. All the alternatives have the same...

A firm is examining some alternatives to invest their money. All the alternatives have the same useful life, 10 years. The interest rate is 7% and the firm has a flat tax rate of 31%. The options are summarized in the following table. Alternatives First Cost Annual Costs Annual Benefits Dep. Method A $17,000 $900 $4,500 SL B $25,000 $1,050 $3,250 SOYD C $22,000 $1,125 $5,125 MACRS (7-yr) What is the after-tax IRR for project A? What is the after-tax...

The following two investment alternatives are being evaluated using the B/C ratio method. The alternatives have...

The following two investment alternatives are being evaluated using the B/C ratio method. The alternatives have a 5-year service life and the MARR is 18% per year. Alternative A Alternative B Capital investment $10,900 $16,000 Annual revenues 4,000 7,500 Annual costs 250 900 Market value at EOY 5 5,000 9,200 Click the icon to view the interest and annuity table for discrete compounding when i equals=18%per year. Calculate the modified B/C ratio of Alternative A A. 1.32 B.1.35 C.1.26 D.0.90...

"The City Ledger" define what city-ledger, then categories and discussed/ create a list of best practices...

"The City Ledger" define what city-ledger, then categories and discussed/ create a list of best practices for a hotel chain of your choice. (Be sure to briefly describe the chain in your response.) Analyze the mechanics of the entry and make at least one recommendation for improving the process. Please be as creative as you like.

Question