If a Soda Tax Is Implemented and Demand for Soda

question 228

Multiple Choice

If a soda tax is implemented and demand for soda is price elastic, the decline in equilibrium quantity would be ________ and the increase in equilibrium price would be ________ than if demand were inelastic.

• A)larger; larger
• B)larger, smaller
• C)smaller; larger
• D)smaller; smaller

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Definitions:

Credit Sales

Transactions where goods or services are sold and payment is received at a later date.

Goods Transferred

The process of moving goods from one location to another, often referring to the change in ownership of inventory from seller to buyer.

Refund Liability

Refund Liability is an obligation arising from the potential need to repay customers for returned or unsatisfactory goods and services.

Merchandise Returns

Goods that are returned to the seller from the buyer, generally due to defects, dissatisfaction, or the wrong items being delivered.