Suppose That the Elasticity of Demand for Insulin Is 0

question 289

Multiple Choice

Suppose that the elasticity of demand for insulin is 0.1, the elasticity of demand for oranges is 1.2, and the elasticity of supply for insulin and oranges is 0.4. If the government imposes a 10 percent tax on both insulin and oranges, the decrease in the quantity of oranges is ________ the decrease in the quantity of insulin.

• A)larger than
• B)smaller than
• C)equal to
• D)not comparable to
• E)More information is needed to determine how the decrease in the quantity of oranges compares to the decrease in the quantity of insulin.

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Definitions:

Taxes

Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Income Statement

A financial document that reports a company's revenues, expenses, and profit over a specific period, showing its financial performance.

Cash Flow

The total amount of money being transferred into and out of a business, affecting its liquidity, operations, and financial health.

Asset Value

The monetary worth attributable to an asset, which could be based on market value, cost, or an appraisal method.