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Question: There's a gas shortage in Gasland. You're presented with two proposals that will achieve the same level of reduction in the use of gas. Proposal A would force everybody to reduce their gas consumption by 5 percent. Proposal B would impose a 50-cent tax on the consumption of a gallon of gas, wich would also achieve a 5 percent reduction. Consumer of gas can divided into two groups-one group whose demand is elastic and another group whose demand is inelastic.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M92253152

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