Holt 7525-9 S15_IT

___ 15. A tax is placed on the sellers of Good F. The burden of the tax on Good F will fall mainly
on the buyers if:
a. the demand for Good F is more elastic than the supply of Good F
b. the supply of Good F is more elastic than the demand for Good F
c. the demand for Good F is perfectly inelastic
d. Both b. and c. above
___ 16. When a tax is imposed on the buyers or the sellers of a good:
a. a wedge is created between the price paid by the buyers and the price received by
the sellers
b. the number of mutually beneficial transactions that take place is reduced
c. a deadweight loss is created
d. All of the above
___ 17. The deadweight loss of a tax will be greater:
a. the more elastic demand and supply are
b. the higher the tax rate is
c. Both of the above
d. Neither of the above
Problems:
1. List the four determinants of price elasticity of demand.
Use the following demand schedule to answer questions 2. and 3.
Price
Quantity Demanded
$16 30
14 40
12 50
10 60
8 70
6 80
4 90
2. Based on the demand schedule above, compute the price elasticity of demand
for a change in price from:
a. $16 to $14
b. $14 to $12
c. $12 to $10
d. $10 to $8
e. $8 to $6
f. $6 to $4
FOR REVIEW ONLY - NOT FOR DISTRIBUTION
Elasticity 17 - 16