Question

A convenience store owner in Philadelphia was worried that the implementation of the 1.5 cents per ounce tax on sweetened beverages would cause the quantity demanded to fall by so much that he would be in a worse situation if he passed the tax on to customers by raising prices than if he did not raise prices. If raising the price of sweetened beverages would cause the owner to receive less total revenue from the sale of sweetened beverages, the demand for sweetened beverages is:_______
a.. inelastic.
b.. unit elastic.
c. perfectly inelastic.
d. elastic.

Answer 1

Answer:

Elastic- D

Explanation:

When the demand of a product is said to be elastic, it means the price and other factors have a large effect on the quantity purchased by consumers. An increase in price will produce an effect where the quantity purchased decreases.

Elastic demand as opposed to inelastic demand indicates that the consumers can do without that product and can afford to do comparisons before shopping as there is no desperation for the product.