Supply and Demand

The majority burden of tax will fall on buyers as producers can easily pass on costs due to high demand elasticity.

The tax burden will be evenly split between buyers and sellers due to equal relative responsiveness from both sides for unitary elastic goods or services.

Sellers will bear most of the tax burden due to inelastic supply meaning they have fewer alternatives for adjusting their production.

Consumer demand will not change significantly following the imposition of such taxes, hence revenue generated may be lower than expected.

Total revenue will stay the same.

Total revenue will increase.

The effect on total revenue cannot be determined.

Total revenue will decrease.

The number of firms in the market expands dramatically as barriers to entry are perceived as lower.

All firms start to exploit economies of scale leading to decline in average costs and larger output.

Firms experience increased price competition leading to narrower profit margins due to enhanced price elasticity of demand.

Consumers begin to favor single brands turning the market into a pure monopoly.

Consumer surplus.

Marginal utility.

Total revenue test.

Price elasticity of demand.

Using club goods framework by allowing exclusive access only to members who pay dues.

Encouraging voluntary contributions as individuals directly benefit from its presence.

By providing it publicly due to its characteristics as a non-excludable and non-rivalrous good.

Through private markets charging fees since exclusion from usage is possible through technology.

The demand curve for train tickets will shift to the right.

There will be a movement along a steady train ticket supply curve due to price rise alone.

The supply curve for train tickets will become less elastic.

The price elasticity of demand for airline tickets will increase.

Neither offers flexibility since both impose mandatory reductions in pollution levels without choice.

Both provide equal flexibility as both are market-based approaches to controlling pollution.

Pollution taxes offer greater flexibility because firms can decide between paying the tax or reducing emissions based on cost-effectiveness.

Cap-and-trade policies provide more flexibility since firms can choose how or if they want to reduce emissions or buy/sell allowances.

Unit Elasticity

Relatively Inelastic Demand

Perfectly Inelastic Demand

Perfectly Elastic Demand

Exactly 1

Between 0 and 1.

Zero.

Greater than 1 but less than infinity.

It would become unitary elastic as prices and quantities adjust proportionally.

It would not significantly change as consumers have limited substitutes.

It would become more inelastic as firms pass on the higher costs to consumers.

It would become perfectly elastic due to consumer resistance to price increases.