Explain these situations using an elasticity concept: a. The government has imposed a 10% excise tax...

 

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Explain these situations using an elasticity concept: a. The government has imposed a 10% excise tax on widgets (assessed against the sellers), but the price of widgets only rises 3%. b. Graduate students get an increase in a living stipend, so a local grocer changes the allocation of shelf space for ramen noodles. c. After years of higher wages in a developing country, consumers are less sensitive to price changes in rice. Explain these situations using an elasticity concept: a. The government has imposed a 10% excise tax on widgets (assessed against the sellers), but the price of widgets only rises 3%. b. Graduate students get an increase in a living stipend, so a local grocer changes the allocation of shelf space for ramen noodles. c. After years of higher wages in a developing country, consumers are less sensitive to price changes in rice.

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3 a In this case the government has imposed 10 excise tax on widgets but the price of widgets have i... View the full answer