If the Elasticity of Demand Is 1 in Absolute Value

question 63

Multiple Choice

If the elasticity of demand is 1 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 demand is unit elastic.

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Definitions:

Informational Influence

In groups, a form of influence that occurs when a group member accepts information from others as valid evidence about reality. Influence of this type is particularly likely to occur in situations of uncertainty or where there are no external or “objective” standards of reference.

Public Compliance

Occurs when individuals outwardly conform to social norms or expectations, often to fit in or avoid conflict, without necessarily agreeing with them internally.

Parent-Teacher Association

An organization composed of parents and teachers that aims to facilitate parental participation in schools and improve the educational experience.

Theater Crowd

A group of people gathered to watch a live performance in a theatre setting.