Answered: For which product is the income…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

For which product is the income elasticity most likely to be negative?

Group of answer choices

1. Bread

2. Rice

3. Used clothing

4. Cheerios cereal

A state government wants to increase the taxes on cigarettes to increase tax revenue. This tax would only be effective in raising new tax revenues (as well as causing the smallest impact in society's economic welfare) if the price elasticity of demand is:

Group of answer choices

1. Inelastic.

2. Perfectly elastic.

3. Elastic.

4. Unit elastic.

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