What Happens as Elasticities of Supply and Demand Increase

question 205

Multiple Choice

What happens as elasticities of supply and demand increase

• A)the smaller the deadweight loss from a tax
• B)the less intrusive a tax will be on a market
• C)the greater the deadweight loss from a tax
• D)the more equitable the distribution of a tax between buyers and sellers

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Definitions:

Natural Gas Extraction

The process of exploring, drilling, and producing natural gas from underground reservoirs.

Imperfectly Elastic

Describes a demand curve that does react to price changes, but not in a perfect one-to-one relationship, indicating some sensitivity to price changes but not to an infinite degree.

Substitute

A good or service that can be used in place of another to satisfy similar needs or desires.

Economic Rent

The excess payment made to a factor of production over what is necessary to keep it in its current use, reflecting payment beyond its opportunity cost.