Good a Has a Price Elasticity of Demand of

question 74

Multiple Choice

Good A has a price elasticity of demand of .27, while good B has a price elasticity of demand of 2.9. To raise the most tax revenue, the government should:

• A) place a unit tax on good A.
• B) place a unit tax on good B.
• C) raise the price elasticity of demand for good A.
• D) subsidize the production of good B.
• E) cut its spending for various social programs.

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Definitions:

Decrease

A reduction or decline in size, quantity, or intensity.

Quantity Supplied

The amount of a product that producers are willing and able to sell at a given price over a specific period.

Price of Lamps

The cost consumers pay for lamps, which can vary based on factors like design, brand, materials, and production costs.

Supply

Refers to the total amount of a product or service available for purchase at any given time.