A-LevelEconomicsThe price system and the microeconomy9708/12 · Oct/Nov 2019 · Q101 Mark
A government increased a specific tax on shoes. The resulting increase in the price of shoes was paid mainly by the consumer and not by the producer. What must be true for this to happen?
AThe price elasticity of demand was less than the price elasticity of supply.
BThe price elasticity of demand was unitary.
CThe price elasticity of supply was less than one.
DThe price elasticity of supply was inelastic while the price elasticity of demand was elastic.
✓ Correct answer
A: The price elasticity of demand was less than the price elasticity of supply.
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