Question

When airbnb customers in malibu start paying hotel taxes, this will have the potential to raise the equilibrium price in this market and, therefore, decrease efficiency. this would have a tendency to decrease producer surplus and decrease deadweight loss. decrease consumer surplus and increase deadweight loss. maximize consumer surplus and minimize producer surplus. increase consumer surplus and increase producer surplus?

Answer 1

When airbnb customers in malibu start paying hotel taxes, this will have the potential to raise the equilibrium price in this market and, therefore, decrease efficiency.   The equilibrium price refers to the market price when the quantity of goods and services supplied is equal to the demand of the goods and services. If equilibrium price rises, efficiency decreases due to the market not being equal with the supply and demand of items.