If There Is a $1 Per Box Tax Imposed on the Sale

question 21

Multiple Choice

If there is a $1 per box tax imposed on the sale of tea and the price paid by consumers increases by $0.50, what may we conclude about the price elasticities of demand and supply?

• A)The elasticity of supply must be less than the price elasticity of demand
• B)The amount exchanged in the market will remain the same
• C)The elasticity of supply must be greater than the price elasticity of demand
• D)The elasticity of supply must be equal to the elasticity of demand
• E)We need more information to answer the question

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Definitions:

Mixing Department

A section within a manufacturing process where various materials or ingredients are combined to produce a product.

Manufacturing Overhead

All manufacturing costs other than direct labor and direct materials, including costs related to running the factory such as utilities or rent.

Work In Process

Inventory that includes goods in the middle of the production process but not yet completed, representing a portion of a manufacturing company's current assets.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, such as utilities for the production plant, depreciation of manufacturing equipment, and salaries of maintenance personnel.