Answer:
a)
Simpons 60,000 / 3 = 20,000
Milhouse 60,000 / 4 = 15,000
Flanders 60,000 / 1.5 = 40,000
b)
Simpons zero
Milhouse -3
Flanders -26.333
c)
Simpons 20,000 x 21 = 420,000
Milhouse 15,000 x 22 = 330,000
Flanders 40,000 x 19.5 = 780,000
Explanation:
a) we divide the required amount over the tax increase/decrease
current tax revenue:
20,000 x 2 = 40,000
required revenue 40,000 + 20,000 statue = 60,000
b) we divide the increase in price over the increase in quantity
[tex]\frac{q_1-q_2}{\frac{q_1+q_2}{2}} \div\frac{p_1-p_2}{\frac{p_1+p_2}{2}}[/tex]
Simpson q1 - q2 = 20,000 - 20,000 = 0 then then elasticity is zero.
Milhouse:
[tex]\frac{20,000-15,000}{\frac{35,000}{2}} \div\frac{20 - 22}{\frac{42}{2}}[/tex]
elasticity = -3
Flanders:
[tex]\frac{20,000-40,000}{\frac{60,000}{2}} \div\frac{20 - 19.5}{\frac{39.5}{2}}[/tex]
elasticity = -26
c) we multiply the amount produced by the price after taxes.