Assume That the Elasticities of Supply and Demand in an Industry

question 112

Multiple Choice

Assume that the elasticities of supply and demand in an industry are both equal to 2 and that it is currently untaxed. A new tax imposed on the industry will:

• A)​be borne more by suppliers than demanders.
• B)​be borne more by demanders than suppliers.
• C)​be borne equally by demanders and suppliers.
• D)​not raise any added revenue for the government since demand is relatively elastic.

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Definitions:

James-Lange Theory

A theory of emotion that posits that physiological arousal precedes the experience of emotion, suggesting emotions are the result of perceiving body changes.

Cognitive Appraisal

The process by which an individual evaluates and interprets a situation, determining its significance for their well-being.

Two-Factor Theory

A psychological theory that proposes emotion is based on two factors: physiological arousal and cognitive label.

Cannon-Bard Theory

The theory that an emotion-arousing stimulus simultaneously triggers (1) physiological responses and (2) the subjective experience of emotion.