The More Elastic the Demand for a Good, the

question 202

Multiple Choice

The more elastic the demand for a good, the

• A) less a sales tax lowers the price paid by buyers.
• B) more a sales tax lowers the price paid by buyers.
• C) less a sales tax raises the price paid by buyers.
• D) more a sales tax raises the price paid by buyers.

Understand the implications of constant marginal cost on pricing and production decisions.

Assess how market concentration ratios indicate the level of competition within an industry.

Investigate factors that influence a firm’s elasticity of demand.

Examine the long-term changes in monopoly power and how it affects market dynamics.

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Definitions:

Price Ceilings

Price controls that outlaw trade at prices above the ceiling.

Intended

Something that is planned or meant to happen in a specific way.

Price Floors

Price controls that outlaw trade at prices below the floor.

Intended

Designed or planned to serve a particular purpose.