Economics 9708 · AS & A Level · Income elasticity of demand

Income elasticity of demand — practice question

On the diagram, the starting quantity traded was Q and the price was P. The price later increased to P1 and the quantity traded increased to Q1. Which combination of government policy measures could account for this change?

  • Athe removal of a maximum price and the imposition of an income tax on consumers
  • Bthe removal of a maximum price and the removal of a subsidy to producers
  • Cthe removal of a minimum price and the granting of a subsidy to producers
  • Dthe removal of a minimum price and the imposition of an indirect tax on the product

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