Asked by Kajal Verma on Jun 19, 2024
Verified
Refer to Figure 5.7. Had the demand for pumpkins been perfectly inelastic at Point A, the price elasticity of demand for pumpkins from the equilibrium point before the imposition of the tax to the equilibrium point after the imposition of the tax would be
A) 0.
B) 1.
C) -1.
D) infinity.
Perfectly Inelastic
Describes a situation where the quantity demanded or supplied does not change in response to a change in price.
Price Elasticity
A tool for measuring how changes in price impact the demand for a particular item.
Excise Tax
Excise Tax is a specific tax levied on particular goods, services, or transactions, often included in the price of products like gasoline, tobacco, and alcohol.
- Determine and expound upon the price elasticity of demand by utilizing specific data.
- Examine the visual representations of supply and demand fluctuations, including adjustments caused by tax impositions.
Verified Answer
GC
Gillian ClymerJun 22, 2024
Final Answer :
A
Explanation :
When demand is perfectly inelastic, consumers are willing to pay any price for the same quantity, meaning the price elasticity of demand is 0.
Learning Objectives
- Determine and expound upon the price elasticity of demand by utilizing specific data.
- Examine the visual representations of supply and demand fluctuations, including adjustments caused by tax impositions.