Consider a Good Whose Own Price Elasticity of Demand Is

question 120

Multiple Choice

Consider a good whose own price elasticity of demand is -0.5 and price elasticity of supply is 1.5. The fraction of a specific tax that will be passed through to consumers is:

• A) 0
• B) 0.25
• C) 0.5
• D) 0.75
• E) 1

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Definitions:

Economic Growth

An increase in the economy's capacity to produce goods and services, often measured by the rise in real GDP over time.

Government Size

Refers to the scope and scale of government operations and activities, including public spending, taxation, and the number of employees.

Tax-Transfer Activities

Government actions involving the collection of taxes and redistribution of income through spending and transfers to achieve economic objectives.

Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen, representing the cost of forgone options.