Author Question: Jim has estimated elasticity of demand for gasoline to be -0.7 in the short-run and -1.8 in the long ... (Read 111 times)

washai · **on:** Jul 1, 2018

Jim has estimated elasticity of demand for gasoline to be -0.7 in the short-run and -1.8 in the long run. A decrease in taxes on gasoline would:
a. lower tax revenue in both the short and long run.
b. raise tax revenue in both the short and long run.
c. raise tax revenue in the short run but lower tax revenue in the long run.
d. lower tax revenue in the short run but raise tax revenue in the long run.

Question 2

What is the Nash equilibrium of this game?
a. Both the vendors price high
b. Both the vendors price low
c. Vendor A prices high, vendor B prices low
d. Vendor B prices high, vendor A prices low