Suppose the Absolute Value of the Price Elasticity of Demand

question 78

Multiple Choice

Suppose the absolute value of the price elasticity of demand for yachts equals 4.04,while the price elasticity of supply for yachts equals 0.22.If Congress reinstates a luxury tax on yachts,who will pay more of the tax?

• A)Yacht builders will pay more.
• B)Yacht buyers will pay more.
• C)Yacht builders and buyers will pay equally.
• D)It's impossible to tell without additional information.

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