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Use the Figure a Tax on the Demand for a Good)

Question 7

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Use the figure A Tax on the Demand for a Good) . If we know that the price elasticity of demand is larger than the price elasticity of supply, what is true?

Figure: A Tax on the Demand for a Good
Use the figure A Tax on the Demand for a Good) . If we know that the price elasticity of demand is larger than the price elasticity of supply, what is true? ​ Figure: A Tax on the Demand for a Good   A)  The size of area A is larger than the size of area B. B)  The size of area A is smaller than the size of area B. C)  Area A and area B are the same size. D)  The buyer of this good pays the entire tax incidence because it is being taxed.


A) The size of area A is larger than the size of area B.
B) The size of area A is smaller than the size of area B.
C) Area A and area B are the same size.
D) The buyer of this good pays the entire tax incidence because it is being taxed.

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