Suppose Elasticity of Demand Is 1, Elasticity of Supply Is

question 134

Multiple Choice

Suppose elasticity of demand is 1, elasticity of supply is 2, and a 5 percent excise tax is levied on consumers. Which of the following changes will reduce the burden of the tax on consumers?

• A) Elasticity of demand falls to 0.
• B) Elasticity of demand rises to 2.
• C) Taxing authorities levy the tax on suppliers.
• D) Nothing will change the burden of the tax.

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Definitions:

Thyroid Gland

A gland in the neck that produces hormones regulating heart rate, body temperature, and metabolism.

Hormones

Chemical messengers produced by glands in the body that regulate physiological activities by signaling to organs and tissues.

Autocrine

a mode of hormone action where a hormone acts on the same cell that produced it.

Hypothyroidism

A condition where the thyroid gland is underactive, resulting in a deficiency in thyroid hormones affecting metabolism.