Suppose That the Demand for Digital Pianos Is Price Inelastic

question 240

Multiple Choice

Suppose that the demand for digital pianos is price inelastic and the supply of digital pianos is price elastic.By what amount will a tax of $1.00 per frame levied on buyers of picture frames increase the equilibrium price paid by buyers of digital pianos

• A)by less than $0.50
• B)by more than $0.50 but less than $1.00
• C)by $1.00
• D)by more than $1.00

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Definitions:

Opportunity Cost

The value of the next best alternative forgone as the result of making a decision.

Optimum

The most favorable condition or level at which the best possible outcome or maximum efficiency is achieved.

Sweater

A knitted garment typically covering the upper body, designed for warmth or fashion.

Neue Sachlichkeit

German, “new objectivity.” An art movement that grew directly out of the World War I experiences of a group of German artists who sought to show the horrors of the war and its effects.