If the Demand for a Product Is Perfectly Inelastic and the Supply

question 24

Multiple Choice

If the demand for a product is perfectly inelastic and the supply curve is upsloping, a $1 excise tax per unit of output will

• A) raise the price by less than $1.
• B) raise the price by more than $1.
• C) raise the price by $1.
• D) lower the price by $1.

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Definitions:

Decision Making

The process of selecting a course of action from multiple alternatives to achieve a desired outcome.

Preferred Course

Typically refers to a course or subject that an individual chooses to study, based on interest, goals, or requirements for a career or academic path.

Implementing Solution

The process of putting into action or executing a plan or solution to address a specific problem or challenge.

Behavioural Decision Model

Describes decision‐making with limited information and bounded rationality.