Quantitative Method in Economics - Assignment Example

This is the rate which the government has to charge firms involved in polluting the environment to compensate for the impacts of their operations to the environment. 16. The total tax revenue collected will be arrived at by taking the product of this tax rate and the estimated units likely to be produced. Assuming the units produced are Q*; the tax revenue will be 3.3698Q*. 18. Price elasticity of demand is the change in price relative to demand and it is a measure of the degree or extent at which price changes relative to the demand.

It is worked out as the Change in demand divided by Change in price; 20. Depending on how elastic demand is will dictate the potion for the producers and that for the consumers. With inelastic demand as witnessed in our case, the producer will bear a smaller weight of the tax as compared with the consumers who will feel a greater pinch of the