If the Elasticity of Supply Is 1, and the Elasticity

question 203

Multiple Choice

If the elasticity of supply is 1, and the elasticity of demand is 3 (in absolute value) , then for a tax of $1 buyers will pay:

• A) an extra 25 cents and sellers will receive 75 cents less.
• B) an extra 75 cents and sellers will receive 25 cents less.
• C) an extra 50 cents and sellers will receive 50 cents less.
• D) nothing extra since this is the special case where demand is unit elastic.

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Definitions:

Underground Railroad

A network of secret routes and safe houses used in the United States during the 19th century to help enslaved African Americans escape to free states and Canada.

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A period of intense socio-political and cultural change in Quebec, Canada during the 1960s, characterized by secularization, state intervention in the economy, and a shift towards welfare state models.

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A person's identification with a particular racial group, often influenced by physical appearance, cultural heritage, and societal definitions of race.

Ethnic Identity

A person's sense of belonging to a specific ethnic group, including aspects of culture, tradition, language, and heritage.