b The city decides to restrict the number of pretzel stand licenses reducing

B the city decides to restrict the number of pretzel

  • Notes
  • sendemailtoknow
  • 32
  • 43% (7) 3 out of 7 people found this document helpful

This preview shows page 31 - 32 out of 32 pages.

b. The city decides to restrict the number of pretzel-stand licenses, reducing the number of stands to only 800. 
Image of page 31
What effect will this action have on the market and on an individual stand that is still operating? Draw graphs to  illustrate your answer. c. Suppose that the city decides to charge a fee for the 800 licenses, all of which are quickly sold. How will the size  of the fee affect the number of pretzels sold by an individual stand? How will it affect the price of pretzels in the  city? d. The city wants to raise as much revenue as possible, while ensuring that all 800 licenses are sold. How high  should the city set the license fee? Show the answer on your graph.
Image of page 32

You've reached the end of your free preview.

Want to read all 32 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture