Figure 8-15

question 39

Multiple Choice

Figure 8-15
-Refer to Figure 8-15.Panel (a) and Panel (b) each illustrate a $4 tax placed on a market.In comparison to Panel (a) ,Panel (b) illustrates which of the following statements?

• A)When demand is relatively inelastic,the deadweight loss of a tax is smaller than when demand is relatively elastic.
• B)When demand is relatively elastic,the deadweight loss of a tax is larger than when demand is relatively inelastic.
• C)When supply is relatively inelastic,the deadweight loss of a tax is smaller than when supply is relatively elastic.
• D)When supply is relatively elastic,the deadweight loss of a tax is larger than when supply is relatively inelastic.

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Definitions:

Line Extension

The addition of new products to an existing product line of a brand, often in the same product category, to target a wider audience or offer more variety.

Disruptive Innovation

An innovation that significantly alters the way a market or industry functions, often displacing established competitors and reshaping the landscape.

Line Extension

A strategy that involves introducing additional items in the same product category under the same brand name, such as new flavors, forms, colors, added ingredients, or package sizes.

Category Extension

The strategy of using an established brand's name to enter a new product category or market segment, leveraging the brand's existing reputation and customer base.