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.

---

Definitions:

Labor-intensive Industries

Sectors or businesses that require a large amount of labor to produce goods or services, as opposed to being heavily automated or equipment-oriented.

Availability

The extent to which a product or service is obtainable and ready for use by customers.

Cost of Labor

The total amount spent by businesses on employee wages, benefits, and payroll taxes.

Supply Chain Operation

The execution and management of activities involved in sourcing, procurement, conversion, and logistics management to produce and deliver goods or services.