In the Case of a Per-Unit Tax on a Good

question 9

Multiple Choice

In the case of a per-unit tax on a good, which of the following situations will lead to the greatest change in price?

• A)Supply and demand are relatively inelastic.
• B)Supply and demand are relatively elastic.
• C)Demand is relatively elastic and supply is relatively inelastic.
• D)Demand is relatively inelastic and supply is relatively elastic.
• E)Both supply and demand do not exist.

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Definitions:

Formal Operational

The stage in Piaget’s theory of cognitive development where individuals gain the ability to think abstractly and reason logically.

Autism

A condition of developmental nature marked by difficulties in social interaction and communication, accompanied by limited and repetitive actions.

Menarche

The first menstrual period.

Crystallized Intelligence

Our accumulated knowledge and verbal skills; tends to increase with age.