A city government hopes to decrease the quantity of sugary drinks consumed,
and is planning to implement a tax on the drinks. Should the government tax
companies that sell sugary drinks, or the consumers who purchase t
...
A city government hopes to decrease the quantity of sugary drinks consumed,
and is planning to implement a tax on the drinks. Should the government tax
companies that sell sugary drinks, or the consumers who purchase them?
The companies that sell the drinks
See correct answer for explanation.
The consumers who purchase the drinks
See correct answer for explanation.
The impact of the tax will be the same regardless of who pays the tax
correct
Prices will adjust so that the impact on consumers and producers will be the same
regardless of who officially pays the tax.
The quantity of drinks consumed will not decrease as a result of the tax
The quantity will decrease since demand is unlikely to be perfectly inelastic.
2) Which of the following statements is true?
If demand is linear, slope will vary across different points on the demand curve whereas the
elasticity will be the same at all points on the curve.
A linear demand curve has a constant slope, but each point on the curve has a different
elasticity.
Elasticity does not depend on units whereas slope does.
correct
A demand curve's slope might change if the units demand is measured in change.
The data needed to know the demand curve's entire slope are more likely to be available than
the data needed to calculate elasticity at a given price.
Elasticity at a point on the demand curve can be approximated if you know how quantity
demanded changes with a small price change.
Price elasticity of demand and slope are two names for the same concept.
Slope measures how much quantity changes as price changes, but elasticity gives a
unit-less measure of how significant that change is.
3) Suppose that the table below shows the daily demand for high-speed train tickets
from London to Paris. As the price increases from £250 to £350, what is the price
elasticity of demand?
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