Question

The administration of Prime Minister Lee Hsien Loong seeks to “re-make”
Singapore as a travel destination. It has invited tenders for two integrated
resorts, including casinos. One will be located in Marina South to attract the
meetings and convention business, while the other will be located in Sentosa
Island to attract tourists. Typically, Australian governments have auctioned
casino licenses for a lump-sum fee. By contrast, European governments
have charged casinos a gambling tax.
(a) Suppose that a lump sum fee of $100 million per year and a 25%
betting tax would raise the same revenue for the government.
Suppose that the casino applies uniform pricing and that marginal cost
of operation is constant at $1 per bet. Compare the two policies in
terms of (i) the price of betting, and (ii) the volume of betting.
(b) Would you recommend that the government use the lump-sum license
fee or the betting tax?
(c) Whales are people who travel worldwide to gamble on a large scale.
Casinos compete to attract whales with special facilities, free air travel
and accommodation, and other perks. How should casinos adjust the
odds to whales relative to small-scale gamblers?
Please help me to solve this question

Answer 1

Answer:

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Explanation:

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