Suppose That the Demand for Artichokes (Q_a) Is Given As

question 12

Essay

Suppose that the demand for artichokes (Q_a) is given as:
Q_a = 120 - 4P
a. What is the point price elasticity of demand if the price of artichokes is $10?
b. Suppose that the price of artichokes increases to $12. What will happen to the number of artichokes sold and the total expenditure by consumers on artichokes?
c. At what price if any is the demand for artichokes infinitely elastic?

---

Definitions:

Consumption Tax

A levy imposed on the acquisition of goods and services, charged at the time of purchase.

Income Tax

A charge imposed by authorities on the earnings of individuals and enterprises operating within their territory.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating how much of an additional dollar earned will be taken in taxes.

Average Tax Rate

The proportion of total income that is paid as tax, calculated by dividing the total amount of tax paid by the total income.