Use the following to answer question 26:
Figure: Market for Hotel Rooms
-(Figure: The Market for Hotel Rooms)Use Figure: The Market for Hotel Rooms.Suppose that with no tax the equilibrium price is $110 and the equilibrium quantity is 250.If the municipal government levies a tax of $30 per night on each hotel room rented,the new equilibrium price will equal _____ and the new equilibrium quantity will equal _____.

Question

Use the following to answer question 26:
Figure: Market for Hotel Rooms 
-(Figure: The Market for Hotel Rooms)Use Figure: The Market for Hotel Rooms.Suppose that with no tax the equilibrium price is $110 and the equilibrium quantity is 250.If the municipal government levies a tax of $30 per night on each hotel room rented,the new equilibrium price will equal _____ and the new equilibrium quantity will equal _____.

Quizplus · Accepted Answer

The tax of $30 per night will be added to the price of each hotel room, so the new equilibrium price will be $130 ($110 + $30). The quantity demanded will decrease as a result of the higher price, so the new equilibrium quantity will be 150.

Use the Following to Answer Question 26