Demand curves of questions?
Which of the following will cause the demand curve for housing in the UK to move to the right? 1) a fall in the foreign exchange value of Stirling, 2) Eliminating sales tax on accommodation. Whichever you choose, can you please why the other not? I think both will move to the right.
The answer is: 1) a fall in the exchange value of the pound of Stirling. The reason is: example 1SGD the last time you can change by 2 £, then there is a drop in the foregin exchange value of Stirling, which in turn means E is weakening, which means that 1SGD may change now £ 3. Thus, the increased quantity demanded of hotels in the United Kingdom then curve to the right of travel demand. And why is not 2) elimination of the sales tax on hotel accommodation, it is because sales tax is also tax expense / income tax for the elimination of sales taxes only lead to higher profit margin for the hotel. And with a higher profit margin means that hotels can lower prices rooms to attract more customers because the higher profit margin is able to absorb the cost. However, this way you only have to do with the price equilibrium (where supply and demand meet). So lower prices increase demand and room supply and changing only the equilibrium point.
