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Unformatted text preview: gleaned from this example: if one curve (whether supply or demand) is inelastic, shifts in the complementary curve (whether demand or supply) affect price more than quantity; on the flip side, if one curve is elastic, shifts in the other curve affect quantity more than price. Practically speaking, the government often has to take such effects into consideration before making policy changes. For example, if the government's goal is to limit imports in order to promote domestic industry, it must first consider whether its policy will have the desired effect. If demand for imports is inelastic, an increased tariff on imports will only result in increased prices without a significant drop in quantity of imports consumed, which does not benefit domestic producers and only results in angry domestic consumers....
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- Fall '08