If the Absolute Value of the Tax Elasticity of Supply

question 20

Multiple Choice

If the absolute value of the tax elasticity of supply is 8,a tax cut of 0.5 percent should cause the output supplied to

• A)Increase by 16 percent.
• B)Decrease by 16 percent.
• C)Increase by 4 percent.
• D)Decrease by 4 percent.

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Definitions:

Cognitive Dissonance

A psychological discomfort experienced when holding conflicting cognitions (e.g., beliefs, attitudes, or values), leading to a motivation to reduce the inconsistency.

Contradictory Attitudes

Holding conflicting or opposing views towards an object, person, or situation simultaneously.

Same Object

refers to an identical item or entity being considered or discussed, emphasizing the lack of difference or distinction between them.

Hedonic Purchases

Purchases made for pleasure and enjoyment rather than practical reasons.