A Tax on a Good Whose Demand Is Perfectly Price

question 86

True/False

A tax on a good whose demand is perfectly price inelastic will be effective in discouraging consumption of that good.

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Definitions:

Units

Measurements or quantities of a product or service.

Short-Run Costs

Costs that vary with the level of output in the short term, where at least one factor of production is fixed.

Profitable Level

The point at which a business or operation generates revenue that exceeds its costs, leading to profitability.

Given Price

A specific price point that is set or assumed within a particular context, often used as a reference in economic analysis.