O
ominming
Member
4. Good X has a price elasticity of demand equal to –1.5. In such circumstances, a per unit sales tax on Good X of £5 will lead to which of the following?
May I know why the answer is D? How should this be calculated?
https://postimg.cc/8f8rB1Pb Does the graph of 'The incidence of indirect tax' (Figure 3.6 in textbook) helps in explaining this?
A. A rise in the price charged to consumers of more than £7.50.
B. A rise in the price charged to consumers of £7.50.
C. A rise in the price charged to consumers of between £5 and £7.50.
D. A rise in the price charged to consumers of less than £5.
B. A rise in the price charged to consumers of £7.50.
C. A rise in the price charged to consumers of between £5 and £7.50.
D. A rise in the price charged to consumers of less than £5.
May I know why the answer is D? How should this be calculated?
https://postimg.cc/8f8rB1Pb Does the graph of 'The incidence of indirect tax' (Figure 3.6 in textbook) helps in explaining this?