Asked by Michael Byars on Jul 17, 2024
Verified
Relating to the Economics in Practice on page 340: Europe has a carbon tax, and electricity producers are among the largest of the carbon producing firms. The carbon tax increased the price of electricity, and researchers found that the amount of the tax that was actually passed through to consumers reflected a ________ aggregate demand for electricity.
A) perfectly inelastic
B) very inelastic
C) slightly elastic
D) unit elastic
Carbon Tax
A financial charge imposed on greenhouse gas emissions, aimed at reducing carbon dioxide emissions and combating climate change.
Aggregate Demand
The total demand for all goods and services within an economy at a given overall price level and in a given time period.
- Examine the consequences of external factors and regulatory actions on societal well-being.
Verified Answer
KO
Kayla OlivoJul 17, 2024
Final Answer :
B
Explanation :
The correct answer is B) very inelastic, because the fact that a significant portion of the carbon tax was passed through to consumers indicates that the demand for electricity is very inelastic. This means consumers continue to buy electricity even as its price increases, likely due to the lack of close substitutes for electricity and its necessity.
Learning Objectives
- Examine the consequences of external factors and regulatory actions on societal well-being.