Author Question: FIGURE 4-4Refer to Figure 4-4. There have been proposals that a tax be imposed on sugar-laden soft ... (Read 23 times)

blinding37 · **on:** Oct 12, 2022

Question 1

If the price elasticity of demand is 3.0, then a 10% decrease in price results in a
◦ 30% increase in quantity demanded.
◦ 3.0% decrease in quantity demanded.
◦ 30% decrease in quantity demanded.
◦ 3.0% increase in quantity demanded.
◦ no change in quantity demanded.

Question 2

FIGURE 4-4

Refer to Figure 4-4. There have been proposals that a tax be imposed on sugar-laden soft drinks in an attempt to reduce their consumption. Assume for simplicity that all bottled soft drinks are the same size. Suppose the initial market equilibrium is P = $2.00 and Q = 1000. Suppose the government imposes a tax of $0.60 per soft drink purchased. The change in total expenditure by consumers on soft drinks is

◦ a decrease of $80.
◦ an increase of $480.
◦ an increase of $320.
◦ a decrease of $160.
◦ No change in total expenditure.

aublw · **Reply #1 on:** Oct 12, 2022

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