To Avoid an Increase in the Local Property Tax, Sullivan

question 69

Multiple Choice

To avoid an increase in the local property tax, Sullivan County, New York, proposed a 2 percent hotel tax, which presumably would be passed on to tourists. The hotel industry argued that the tax would hurt hotel business. They are really arguing that

• A)tourist and convention demand is inelastic, so hotel bookings will decline.
• B)tourist and convention demand is very elastic, so hotel bookings will decline.
• C)they would prefer a property tax increase instead.
• D)it is unfair to tax people who do not live in the area.

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Definitions:

Unit Increase

A measure reflecting the change or increment in a particular variable by a single unit.

Holding Constant

A technique in statistical analysis where specific variables are kept unchanged in order to isolate the effects of other variables.

Polynomial Model

A regression model in which the relationship between the independent variable and the dependent variable is modeled as an nth degree polynomial.

Predictor Variable

A variable that is used in statistical models to predict the outcome of a response variable.