Suppose That Government Imposes a Specific Excise Tax on Product

question 173

Multiple Choice

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1) . If the incidence of the tax is such that the consumers of X pay $1.85 of the tax and the producers pay $0.15, we can conclude that the

• A)supply of X is inelastic.
• B)demand for X is unitary elastic.
• C)demand for X is elastic.
• D)demand for X is inelastic.

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Definitions:

Ultrasonic Bat Calls

High-frequency sound waves emitted by bats for navigation and locating prey, inaudible to most other species.

Intensity Threshold

The minimum level of stimulus intensity required to trigger a detectable response or reaction.

Sound Frequency

The number of sound vibrations or cycles per second, usually measured in Hertz (Hz), determining the pitch of the sound.

Intensity Threshold

The minimum level of stimulus intensity that is required to elicit a perceptible response in a sensory system.