**Question:**Demand for salt is nearly perfectly inelastic. If the government imposes a tax of 10% on salt, what shall be the effect on quantity demanded of salt? Why?**Explanation:**Inelastic demand means that the quantity demanded does not change significantly with a change in price. Therefore, even if the government imposes a 10% tax, it is likely that the quantity demanded for salt will remain largely unchanged. This is because salt is a necessity with few substitutes, and consumers will continue to buy it despite the price increase.

According to the given question In simple words we can say that a perfectly inelastic demand is…

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Demand for salt is nearly perfectly inelastic. If the government imposes a tax of 10% on salt what shall be the effect on quantity demanded of salt? Why?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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