Many cities have experienced a substantial decrease in the amount of garbage being collected after they changed from levying a flat tax on each household to a system where the homeowner is charged a fee for each bag or can picked up. Would this have been the result of a change in demand or a change in the quantity demanded? Would you recommend the flat fee or the fee per bag? Why?
Ans:
A change in quantity demanded is caused by a change in price and a change in demand is caused as a result of changes in preferences, availability of substitutes and other factors.
In this case, there is a substantial decrease in the amount of garbage being collected after they change from flat tax to a fee for each bag. This means the change is caused due to change in price and this is a change in quantity demanded.
Fee per bag is recommended as it is more benefical than flat fee in decreasing the amount of garbage.
Get Answers For Free
Most questions answered within 1 hours.