Some consumption goods tend to have price insensitive demand. An example of inelastic demand is groceries. Other goods have elastic demand. An example of elastic demand is vacation homes. If the government is interested in placing the highest tax burden on firms, which good should they tax? Groceries All of the above Vacation homes. bo

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Some consumption goods tend to have price insensitive demand. An example of inelastic demand is groceries.
Other goods have elastic demand. An example of elastic demand is vacation homes. If the government is interested
in placing the highest tax burden on firms, which good should they tax?
Groceries
All of the above
Vacation homes.
Transcribed Image Text:Some consumption goods tend to have price insensitive demand. An example of inelastic demand is groceries. Other goods have elastic demand. An example of elastic demand is vacation homes. If the government is interested in placing the highest tax burden on firms, which good should they tax? Groceries All of the above Vacation homes.
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Elasticity is a measure of the responsiveness of one variable to changes in another variable. More specifically, price elasticity of demand measures the responsiveness of the quantity demanded of a good or service to changes in its price, while income elasticity of demand measures the responsiveness of quantity demanded to changes in income. 

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