The supply of apartments in New York City is inelastic, and the demand for apart

Question

The supply of apartments in New York City is inelastic, and the demand for apartments is elastic. The city introduces a tax on apartment rentals. The morethe demand and the morethe supply of apartments, the larger is the share of the tax paid by the landlord. O A. inelastic, elastic O B. elastic, elastic; O C. elastic; inelastic O D. inelastic, inelastic; O E. unit elastic, unit elastic The government collects a large tax revenue because the tax_the number of apartments rented. O A. increases by a relatively large amount O B. does not change C. O D. O E. increases by a relatively small amount decreases by a relatively large amount decreases by a relatively small amount

Explanation / Answer

Ans) C is the correct option. Elastic ; inelastic. The tax burden fall more on the party which has high elasticity of demand.

Ans) E is the correct option. Decreases by a relatively small amount. When the tax is imposed, the quantity demanded decreases and if the percentage change in quantity demanded is less than the percentage change in price then the total revenue is increased.

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