116 The price elasticity of demand is –1.25, and the share of the tax borne by consumers is 0.80. What is the price elasticity of supply?
At the equilibrium price of $10, the elasticity of demand and supply are –0.9 and 1.10. If the government institutes a $1-per-unit tax, what price will sellers receive and consumers pay after the tax? Sellers will receive $9.55, and consumers will pay $10.55. (True Answer )Correct Sellers will receive $10.25, and consumers will pay $11.25. Incorrect Sellers will receive $9.80, and consumers will pay $10.80. Incorrect Sellers will receive $9.75, and consumers will pay $10.75. Incorrect
118 Figure 3.17 Reference: Ref 3-17 (Figure 3.17) Figure 3.17 shows the effect of a government subsidy. Which of the following statements is TRUE?I. The area of the deadweight loss is C + D + E + G + H + I.II. The subsidy causes producer surplus to increase from area F + G + HF + G + H + I. III. The government's cost of the subsidy is area B + C + D + E + F + G + IV. With the subsidy, consumer surplus is area A + B + C + D + E.�I and IV Incorrect I and III Incorrect III only. (to