Question

How does the price elasticity of demand as a measure of price sensitivity impact tax policy...

How does the price elasticity of demand as a measure of price sensitivity impact tax policy relative to either inducing or reducing consumption?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Price elasticity of demand measures degree of responsiveness of demand to change in price level.

Price elasticity of demand decides if tax policy would be beneficial or not. If demand is inelastic, then tax policy would not be successful in either reducing or inducing consumption. Increase or decrease in tax would not affect consumption in intended ways.

Further if demand is elastic, then change in tax policy would assist in either increase or decreasing consumption disproportionately.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A measure of the responsiveness (or sensitivity) of consumer demand to changes in income is known...
A measure of the responsiveness (or sensitivity) of consumer demand to changes in income is known as the a. quasilinear income elasticity of price demand b. income elasticity of factor substitution c. income elasticity of demand d. cross price elasticity of income demand Your firm offers two core products: X and Y. The cross price elasticity of demand between X and Y is given as 0.15. Which of the following statements is TRUE? a. A 15% increase in the price...
The greater the price elasticity of supply and demand the more effective a tax will be...
The greater the price elasticity of supply and demand the more effective a tax will be at raising revenue the more the consumer will bear the burden of an excise tax the more effective a tax will be at reducing the equilibrium quantity
How does interest elasticity of money demand influence the effectiveness of fiscal policy?
How does interest elasticity of money demand influence the effectiveness of fiscal policy?
The price elasticity of demand depends on a. the units used to measure price and the...
The price elasticity of demand depends on a. the units used to measure price and the units used to measure quantity. b. the units used to measure price but not the units used to measure quantity. c. the units used to measure quantity but not the units used to measure price. d. neither the units used to measure price nor the units used to measure quantity.
. Suppose the income elasticity of demand for food is 0.5 and the price elasticity of...
. Suppose the income elasticity of demand for food is 0.5 and the price elasticity of demand is −0.25. Suppose also that Mia spends $10,000 a year on food, the price of food is $2, and that her income is $35,000. (10 pts) a. If a sales tax on food caused the price of food to increase to $2.50, what would happen to her consumption of food? (Hint: Because a large price change is involved, you should assume that the...
The price elasticity of demand is a measure of A.the shift in the demand curve when...
The price elasticity of demand is a measure of A.the shift in the demand curve when price changes B.the demand for a product holding price constant C. the quantity demanded at a given price D. the responsiveness of the quantity demanded to price changes
Price elasticity of demand is a measure of how responsive a change in quantity demanded is...
Price elasticity of demand is a measure of how responsive a change in quantity demanded is to a change in: Question 32 options: interest rate. price. consumer preferences. supply. Question 33 (10 points) The _______ is the amount by which an additional unit of activity increases its cost. Question 33 options: average cost. marginal benefit. marginal cost. average profit. Question 34 (10 points) The Inverse Elasticity Rule states: Question 34 options: the lower the elasticity, the lower the price. the...
How does the number of substitutes affect the price elasticity of demand for a product or...
How does the number of substitutes affect the price elasticity of demand for a product or resource? What does a higher number of substitutes mean for the slope of the demand curve? What does a smaller number of substitutes mean for the slope of the demand curve?
How does the Beyonce Irreplaceable video relate to the concept of price elasticity of demand?
How does the Beyonce Irreplaceable video relate to the concept of price elasticity of demand?
Provide an example of the concept of the Price elasticity of Demand and explain its impact...
Provide an example of the concept of the Price elasticity of Demand and explain its impact on a business.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT