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EXPLAIN WHY IT IS CRUCIAL THAT POLICY MAKERS HAVE ACCURATE ESTIMATES OF THE RELEVANT DEMAND ELASTICITIES WHEN DECIDING ON A POLICY SCHEME, FOR EXAMPLE FUEL TAXATION
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"EXPLAIN WHY IT IS CRUCIAL THAT POLICY MAKERS HAVE ACCURATE ESTIMATES OF THE RELEVANT DEMAND ELASTICITIES WHEN DECIDING ON A POLICY SCHEME, FOR EXAMPLE FUEL TAXATION" - - - - - - - - - - - CATHERINE ROBINS 03008113 - - - - - - - - - - - ALEXANDROS ZANGELIDIS THURSDAY, 12 - 1pm INTRODUCTION Businesses and governments alike use the concept of elasticity of demand. By looking at demand elasticities, it is possible to predict how consumers will react to a change in the price of a good. It is therefore vital for sellers in helping to assess what may happen to profits and/or market share as a result. For governments, elasticity of demand is imperative when making taxation decisions. For example, would a rise in indirect tax on cigarettes lead to a rise in total tax receipts? Will a rise in road tax cause any significant reduction in car usage, and a fall...
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