'Assume That the Supply of Forest Products Is Relatively Inelastic

question 62

Multiple Choice

'Assume that the supply of forest products is relatively inelastic and the supply of coffee is relatively elastic'.According to this statement, suppose both forest products and coffee have the same percentage tax applied to them, the fall in quantity supplied of forest products will be:

• A)more than the fall in quantity supplied of coffee
• B)less than the fall in quantity supplied of coffee
• C)equal to the fall in quantity supplied of coffee
• D)either more or less than the fall in quantity supplied of coffee, depending on the elasticity of demand

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Definitions:

Income Taxed

A government levy on individual or corporate income.

Regressive Tax Structure

A tax system where the tax rate decreases as the taxable amount increases, placing a higher burden on low-income earners compared to high-income earners.

Proposal

A formal suggestion or plan put forward for consideration or discussion by others.

Percentage

A way of expressing a number as a fraction of 100, used to compare proportions or calculate ratios.