Scenario 5-1 Suppose That the Supply of Aged Cheddar Cheese Is Inelastic

question 499

Multiple Choice

Scenario 5-1
Suppose that the supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%.
-Refer to Scenario 5-1. The price elasticity of supply for aged cheddar cheese could be

• A) -1.
• B) 0.
• C) 0.5.
• D) 1.5.