In Which of the Following Cases Is It Most Likely

question 44

Multiple Choice

In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?

• A)The price elasticity of demand is small,and the price elasticity of supply is large.
• B)The price elasticity of demand is large,and the price elasticity of supply is small.
• C)The price elasticity of demand and the price elasticity of supply are both small.
• D)The price elasticity of demand and the price elasticity of supply are both large.

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Definitions:

Technological Advance

The development and application of new technologies and processes that improve efficiency, productivity, or bring new products to the market.

Product Demand

The desire or need for a specific product or service combined with the capacity to purchase it.

Revenues

The income received by a business from its various activities, typically from the sale of goods and services to customers.