Ask Question
BusinessBusiness
5 September, 21:26

In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue? Answers: A) The price elasticity of demand is small, and the price elasticity of supply is large. B) The price elasticity of demand is large, and the price elasticity of supply is small. C) The price elasticity of demand and the price elasticity of supply are both small. D) The price elasticity of demand and the price elasticity of supply are both large.

+2
Answers (1)
  1. 5 September, 22:44
    0
    The correct answer is option D.

    Explanation:

    An increase in the size of tax is likely to increase the tax revenue when the price elasticity of supply, as well as price elasticity of demand, are both large.

    The imposition of tax will cause an increase in the price of the product. If the price elasticity of demand is higher, an increase in the price will lead to a more than proportionate decrease in demand.

    At the same time, high price elasticity of supply means that when the tax is imposed the sellers will be able to reduce quantity more easily.

    So when less output is produced and demanded the tax revenue will also be lower.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue? Answers: A) The price ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Suppose an interest of 5% for two years can be earned on $1,000 saved today with no risk. What is the least amount a person would need to have a 50% chance of winning to be willing to face a 50% chance of losing $1,000 today and be considered risk
Answers (1)
The following information has been gathered for the GHI Manufacturing Company for its fiscal year ending December 31: Actual manufacturing overhead costs $ 212,500 Actual direct labor hours 54,900 Actual direct labor costs $ 445,000 Estimated
Answers (1)
Inventor and Entrepreneurs are: A. are often one and the same B. never work well together C. both have the skills to quickly sell the product they invented D. can work together to innovate products and bring them to stores E.
Answers (1)
Which of the following statements is true in the context of selecting the best alternative? a. The decision maker can only select one best alternative. b. The decision maker can develop subjective estimates and weights for choosing an alternative. c.
Answers (1)
What are some various types of corporations?
Answers (1)
New Questions in Business
Keithomp, a company that manufactures and exports candies, sells different flavors of candy depending on the taste preferences of the country that it supplies to.
Answers (1)
Kane Company's employees earn vacation time at the rate of 1 hour per 40-hour work period. The vacation pay vests immediately (that is, an employee is entitled to the pay even if employment terminates).
Answers (1)
Digg Co. installs a manufacturing machine in its factory at the beginning of the year at a cost of $36,000. The machine's useful life is estimated at 10 years, or 300,000 units of product, with a $6,000 salvage value.
Answers (1)
Which of the following actions will likely cause a project to fail? A) dedicating valuable team member time to identify risk events B) spending project funding to procure needed tools and spare parts C) unclear or conflicting stakeholder
Answers (1)
Mcgregor company allows customers to pay with credit cards. the credit card company charges mcgregor 2% of the sale. when a customer uses a credit card to pay mcgregor $300 for services provided, mcgregor would:
Answers (1)
Home » Business » In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue? Answers: A) The price elasticity of demand is small, and the price elasticity of supply is large.
Sign Up Forgot Password?