Demand Is Classed as Price Inelastic If the Elasticity Coefficient

question 47

Multiple Choice

Demand is classed as price inelastic if the elasticity coefficient is:

• A) less than one
• B) equal to one
• C) greater than one
• D) equal to zero

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Definitions:

Laffer Curve

A theory that illustrates the relationship between tax rates and the amount of tax revenue collected by governments.

Deadweight Loss

A loss of economic efficiency that can occur when equilibrium for a good or service is not achieved or is unattainable.

Tax Per Unit

A tax that is levied on a per unit basis, meaning for every unit of a good produced or sold, a certain amount of tax is paid.

Deadweight Loss

A reduction in economic effectiveness that happens when a good or service does not reach, or cannot reach, its equilibrium state.