Economics 9708 · AS & A Level · Maximum and minimum prices

Maximum and minimum prices — practice question

A product whose supply is infinitely elastic sells 1000 units each week at a price of $1 per unit. Over the relevant range, price elasticity of demand is 1.5. The government introduces a tax of 10%. What is the government’s weekly tax revenue from this product?

  • A$15
  • B$85
  • C$100
  • D$150

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