A-LevelEconomicsGovernment microeconomic intervention9708/12 · May/June 2020 · Q121 Mark
The diagram shows the supply curve of a product. [Figure 12.1] The government imposes a specific indirect tax of $5 on the product. How will the price elasticity of supply of the product change?
This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.
Afrom elastic (>1) to inelastic (<1)
Bfrom inelastic (<1) to elastic (>1)
Cfrom inelastic (<1) to unitary (=1)
Dfrom unitary (=1) to elastic (>1)
✓ Correct answer
D: from unitary (=1) to elastic (>1)
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