If the Elasticity of Demand Is 2 in Absolute Value

question 142

Multiple Choice

If the elasticity of demand is 2 in absolute value, and the elasticity of supply is 1 in absolute value, how much of a tax burden will the buyer bear relative to the seller?

• A) The buyer will bear more of the tax burden than will the seller.
• B) The seller will bear more of the tax burden than will the buyer.
• C) The buyer and seller will share the tax burden equally.
• D) The buyer will not bear any of the tax burden since the demand curve is twice as elastic as supply.

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Definitions:

Construct Validity

The degree to which a test or instrument measures the theoretical construct or psychological concept it intends to measure.

Construct Validity

Construct validity refers to the degree to which a test measures what it claims, or purports, to be measuring.

Self-Esteem

An individual's subjective evaluation of their own worth or value, encompassing beliefs and emotions about oneself.

Positive Linear Relationship

A relationship between two variables where increases in the value of one variable are associated with increases in the value of the other variable.