Suppose the Demand for Wine Is Elastic and That Initially

question 231

Multiple Choice

Suppose the demand for wine is elastic and that initially 5 million bottles of wine are produced and consumed in the United States. If the government imposes a tax of $2 per bottle of wine, the government will collect

• A) more than $10 million in tax revenues.
• B) $10 million in tax revenues.
• C) less than $10 million in tax revenues.
• D) an amount that may be more than, equal to, or less than $10 million in tax revenues depending on the precise elasticity of demand.

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Definitions:

Firm Differentiation

The strategy of making a company's products or services distinct from its competitors in the eyes of customers, often through unique characteristics or superior quality.

Stigmatize

To brand or label something negatively, leading to discrimination or ostracization, often based on misconceptions or prejudice.

Personal Transformation

The process of significant change in a person's character, appearance, or circumstances, often fostered by products or services.

Tattoo

A form of body modification where a design is made by inserting ink, dyes, and pigments, either indelible or temporary, into the dermis layer of the skin to change the pigment.