Suppose the Elasticity of Demand for Takeaway Food Is 3

question 6

Multiple Choice

Suppose the elasticity of demand for takeaway food is 3.00 and the elasticity of supply is 1.20. If the government imposes a sales tax on takeaway food to promote healthy eating, which of the following occurs? i. Less takeaway food is purchased by buyers.
Ii) Less takeaway food is produced by sellers.
Iii) The government receives the excess burden as revenue.
Iv) Both the consumer surplus and the producer surplus decrease.

• A) i, ii, iii and iv
• B) i and ii
• C) iii only
• D) i, ii, and iv
• E) iv only

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