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?? about Price Elasticity
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| Dj Fred Lamar |
Sup ppl....me again
Gotta ??? for ya about this subject...
Say that the curreny price for a gallon of gasoline is $1.29. At this price, the Price Elasticity of Demand for gasoline in inelastic. Now, the State congress is considering adding an excise tax of $.10 per gallon. Will the excise tax increase tax revenuees or decrease revenues?
Would appreciate any comments.....thanks |
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| DevanteS |
if gasoline is completely price inelastic, then the people will buy it whatever the cost. if the govt increases the price by adding a 10cent tax/gallon then revenues will increase since people will buy whatever the price
revenue will increase by how many gallons of gas sold times 10 cents
Pork! |
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| Juricimo |
| quote: | Originally posted by DevanteS
if gasoline is completely price inelastic, then the people will buy it whatever the cost. if the govt increases the price by adding a 10cent tax/gallon then revenues will increase since people will buy whatever the price
revenue will increase by how many gallons of gas sold times 10 cents
Pork! |
i quite agree with you Pork;) ALmost no substitutes for gasoline, so yeah...people will still buy gas.
>JM<
PS. Pork seems to know his ecomomics;) |
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| reveal |
price in the US:
1 gallon = 3,785 liters @ $1,29 =>
12 SEK / 1 gallon = 3,1 SEK / liter
price in Sweden:
1 liter = 0,26 gallons @ 9,66 SEK =>
36,56 SEK / gallon = $3,90 / gallon
so even if your tax gets raised by ten cents, you should be happy ;) |
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| Dj Fred Lamar |
| Alright.....thanks for ur replies.....appreciate it...:D |
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| zzleeper |
| any doubt/question 'bout economics, i *may* be able to help u.. any other economist around that my help me with my econometrics? :p:p |
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| jdat |
I heard a figure which I am pretty sure is wrong , anyone know the real figure or have anything to back this up ??????
here it is :
the gas at the pump was bought six months ago.
( meaning the price fluctuates, but wtf .... why now on gas that was purchased months before ??? that's the real dilemna ) |
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| Plavka |
| quote: | Originally posted by zzleeper
any doubt/question 'bout economics, i *may* be able to help u.. any other economist around that my help me with my econometrics? :p:p |
econometrics is the worst course i've ever taken :nervous: thank god it's over. good luck to you :D |
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| zzleeper |
| quote: | Originally posted by Plavka
econometrics is the worst course i've ever taken :nervous: thank god it's over. good luck to you :D |
(X'X)^(-1)*(X'Y)=B ... ? :tongue3 :tongue3 :tongue3 :tongue3 :tongue3 :tongue3
Probit, Logit, Tobit? :nervous: :nervous: :nervous: :nervous: :nervous: :nervous: :nervous: |
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| flystyler |
| quote: | Originally posted by DevanteS
if gasoline is completely price inelastic, then the people will buy it whatever the cost. if the govt increases the price by adding a 10cent tax/gallon then revenues will increase since people will buy whatever the price
revenue will increase by how many gallons of gas sold times 10 cents
Pork! |
Yep, petrol in any contry is very inelastic especiall in developed countries
People only use petrol when they need to, its not the kinda thing like food you can buy too much of and throw away when it gets old, lol, and visa versa
So revenue will increase. |
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| DevanteS |
| quote: | Originally posted by Plavka
econometrics is the worst course i've ever taken :nervous: thank god it's over. good luck to you :D |
there are no shortcuts to econometrics. you gotta put in the work and understand it from its calculus derivatives
the payoff? once you know it? you can mold regression programs to your will, and manipulate/massage your data to prove your point.
econometrics is the most indispensable tool for any serious economist, whether you use if for your thesis, grad work or any future research
Pork!
BA Economics
MA Economics (one year) |
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