Ask Question
BusinessBusiness
2 April, 00:30

Suppose that the (absolute value) of the elasticities of demand for apples, bananas, and peaches are 0.9, 1.6, and 0.8, respectively. Assume that the supply curves for these goods are identical and that an identical tax is levied on each good. Rank the products from highest to lowest in terms of the deadweight loss caused by the tax.

+3
Answers (1)
  1. 2 April, 04:02
    0
    Elasticity of demand impacts the dead weight loss caused by the tax.

    More elastic the demand for a good, higher will be the dead weight loss caused by the tax.

    The elasticity of demand for apples is 0.9

    The elasticity of demand for bananas is 1.6

    The elasticity of demand for peaches is 0.8

    Greater the value of elasticity of demand, more elastic is the demand.

    Bananas have the most elastic demand, followed by apples and then peaches.

    So,

    Bananas will have the highest dead weight loss followed by apples and then peaches.

    Thus,

    The correct order is bananas, apples, peaches.

    Hence, the correct answer is the option (c).
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Suppose that the (absolute value) of the elasticities of demand for apples, bananas, and peaches are 0.9, 1.6, and 0.8, respectively. ...” 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
What was the name of the first successful national labor organization in the united states that offered membership to all workers regardless of occupation, education, gender or race?
Answers (1)
XYZ Company earned operating income of $1,500,000 before income taxes. Capital employed equaled $10,000,000, of which $1,000,000 of mortgage bonds paying 8 percent interest, $3,000,000 unsecured bonds paying 9 percent interest, and $6,000,000 common
Answers (1)
A written promise to pay certain sum of money to another person or company is a
Answers (2)
Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Flay decided to change to the LIFO method. As a result of the change, net income in 2021 was $76 million.
Answers (1)
One of the key ideas of integrative bargaining-invent options for mutual gain-refers to the fact that it is difficult to make decisions in the presence of an adversary. A. TRUEB. FALSE
Answers (1)
New Questions in Business
Assume that a $1,000 bond issued in 2015 pays $100 in interest each year. What is the current yield on the bond if it can be purchased for $1,200? Enter your answer in percent form and to one decimal place. For example, if your answer is 0.034 (3.
Answers (1)
Flex Co. just paid total dividends of $975,000 and reported additions to retained earnings of $2,925,000. The company has 675,000 shares of stock outstanding and a benchmark PE of 16.9 times. What stock price would you consider appropriate?
Answers (1)
Improving performance and striving for a better career is an example of ...
Answers (1)
When dvds and hamburgers were the same price, mavis consumed 3 hamburgers and 5 dvds, and mavis received 10 utils from the last hamburger and 15 utils from the last dvd consumed.
Answers (1)
When a commercial seller's agent invites other brokers to act as subagents to procure a buyer, who is compensated when the property sells?
Answers (1)
Home » Business » Suppose that the (absolute value) of the elasticities of demand for apples, bananas, and peaches are 0.9, 1.6, and 0.8, respectively. Assume that the supply curves for these goods are identical and that an identical tax is levied on each good.
Sign Up Forgot Password?