Suppose the Elasticity of Demand for a Product Is 0

question 11

Multiple Choice

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1. If the government imposes a tax on the product, then

• A) buyers and sellers pay exactly the same share of the tax.
• B) buyers pay a smaller share of the tax than sellers, but both buyers and sellers pay some of the tax.
• C) sellers pay all of the tax.
• D) buyers pay all of the tax.
• E) because the elasticity of demand is zero, the government collects no revenue from this tax.

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Definitions:

F Statistic

A ratio used in ANOVA tests to determine if the means between two or more groups are significantly different.

Null Hypotheses

Postulates that assume no variance between specified variables in a study, used for statistical testing.

Research Hypotheses

Statements made by researchers that predict a relationship between two or more variables.

Total Sample Size

The aggregate number of observations or data points collected in a study.