Asked by
Kevin Ruffins
on Dec 05, 2024Verified
If the elasticity of demand is _____ and the elasticity of supply is _____,tax revenue is likely to increase if the tax rate is increased.
A) 3.3;2.1
B) 3.3;0.5
C) 0.2;2.1
D) 0.2;0.5
Elasticity Of Demand
A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of consumers to price changes.
Elasticity Of Supply
A measure of how much the quantity supplied of a good responds to a change in the price of that good, quantitatively determined by the percentage change in quantity supplied divided by the percentage change in price.
Tax Revenue
The revenue acquired by governments via tax collection.
- Decipher the relationship between tax rates and tax revenue in the framework of elasticity.
Verified Answer
MG
Learning Objectives
- Decipher the relationship between tax rates and tax revenue in the framework of elasticity.