The Tax Elasticity of Supply Is

question 72

Multiple Choice

The tax elasticity of supply is

• A)Always equal to 1.
• B)Always less than 1.
• C)The percentage change in quantity supplied divided by the percentage change in tax rates.
• D)The percentage change in quantity supplied multiplied by the percentage change in tax rates.

---

Definitions:

Physical Capital

Manufactured items used to produce goods and services; includes new plants and new equipment.

Petty Cash

A small amount of cash on hand that is used for paying minor or incidental expenses in a business.

Free Goods

Items or services available in abundance without direct cost, such as air or sunlight, not requiring scarce resources for their production.

Scarce Resources

Refers to the limited availability of inputs—such as labor, capital, and raw materials—used in the production of goods and services.