For Any Given Tax,imposing a Tax in a Market with a Highly

question 110

Multiple Choice

For any given tax,imposing a tax in a market with a highly inelastic demand will:

• A) cause more deadweight loss than a market with an elastic demand.
• B) generate higher revenues than a market with an elastic demand.
• C) Both of these statements are true.
• D) Neither of these statements is true.

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Definitions:

Worker

An individual who performs labour for a company or another person in exchange for compensation.

Diminishing Returns

A rule that implies that after reaching a certain threshold, the profit rate from investing more into a specific sector won't keep rising unless there are changes in other contributing factors.

Production Function

An equation that describes the maximum output that can be achieved with a given set of inputs.

Labor

The use of human mental and physical efforts in the process of producing goods and offering services.