Multiple Choice
The price elasticity of demand for gasoline is 0.27 and for wine is 2.9. If the government had the choice of taxing only one, which of the following should it choose?
A) tax gasoline
B) tax wine
C) tax neither, but raise the price elasticity of demand for each
D) tax neither, but lower the price elasticity of demand for each
E) tax neither, but raise the price elasticity of demand for gasoline and lower it for wine
Correct Answer:
Verified
Correct Answer:
Verified
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