Peanut butter has an upward-sloping supply curve and a downward-sloping demand curve. If a 10 cent per pound tax is increased to 15 cents, the government's tax revenue a. increases by less than 50 percent and may even decline. b. increases by exactly 50 percent. c. increases by more than 50 percent. d. The answer depends on whether supply or demand is more elastic.
Principles of Microeconomics
Principles of Microeconomics
Peanut butter has an upward-sloping supply curve and a downward-sloping demand curve. If a 10 cent per pound tax is increased to 15 cents, the government's tax revenue
a. increases by less than 50 percent and may even decline.
b. increases by exactly 50 percent.
c. increases by more than 50 percent.
d. The answer depends on whether supply or demand is more elastic.
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