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

Income elasticity of demand — practice question

The diagram illustrates the initial demand curve D1 and supply curve S1 for diesel cars in Europe. Point X marks the starting equilibrium. Electric car producers carry out a successful advertising campaign, and a new unit tax is imposed on diesel cars. What will the new equilibrium be?

  • APoint A on the diagram
  • BPoint B on the diagram
  • CPoint C on the diagram
  • DPoint D on the diagram

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