If the Demand for a Good Is Price Elastic in Comparison

question 236

Multiple Choice

If the demand for a good is price elastic in comparison to one that is price inelastic, then:

• A) a higher per-unit sales tax will generate more tax revenue.
• B) a higher per-unit sales tax will generate less tax revenue.
• C) changes in total per-unit sales tax revenue brought about by a price change go in the same direction as the price change.
• D) none of the above is true.

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Definitions:

Developmental

Pertains to the process of growth or advancement through progressive stages.

Synergy

The enhanced effect achieved when multiple elements, organizations, or individuals work together, producing a result greater than the sum of their separate effects.

Free-Riding

The behavior of individuals or entities that benefit from resources, goods, or services without paying for them or contributing their fair share.

Market Growth Rate

measures the increase in a market’s size or demand over a specific period, indicating the expansion or contraction of a market.