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A Policy Maker Has Argued for Higher Taxes on Gasoline

Question 28

Multiple Choice

A policy maker has argued for higher taxes on gasoline to reduce the negative externalities associated with driving. This policy will lead to a relatively ________ reduction in driving if demand is ________.


A) small; perfectly elastic
B) large; perfectly inelastic
C) small; relatively inelastic
D) large; relatively inelastic

Correct Answer:

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