If Elasticity of Demand Is 0

question 26

Multiple Choice

If elasticity of demand is 0.2, elasticity of supply is 0.6, and a 10 percent excise tax is levied on the good:

• A) consumers pay 25 percent of the tax.
• B) sellers pay 25 percent of the tax.
• C) consumers pay 20 percent of the tax.
• D) sellers pay 60 percent of the tax.

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Definitions:

Contract

A legally binding agreement between two or more parties, outlining obligations and conditions that are enforceable by law.

Duration

The duration that something persists or remains.

Group Therapy

A form of psychotherapy in which one or more therapists treat a small group of clients together, sharing experiences and supporting each other’s growth and coping strategies.

Relate

To establish or understand the connection or relationship between two or more things.