Refer to the information provided in Figure 5.7 below to answer the question(s) that follow. Figure 5.7
The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve.
-Refer to Figure 5.7. Had the demand for pumpkins been perfectly inelastic at Point A, the price elasticity of demand for pumpkins from the equilibrium point before the imposition of the tax to the equilibrium point after the imposition of the tax would be
A) 0.
B) 1.
C) -1.
D) infinity.

Question

Refer to the information provided in Figure 5.7 below to answer the question(s) that follow.  Figure 5.7
The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve.
-Refer to Figure 5.7. Had the demand for pumpkins been perfectly inelastic at Point A, the price elasticity of demand for pumpkins from the equilibrium point before the imposition of the tax to the equilibrium point after the imposition of the tax would be
A) 0. 
B) 1. 
C) -1. 
D) infinity.

Quizplus · Accepted Answer

When demand is perfectly inelastic, consumers are willing to pay any price for the same quantity, meaning the price elasticity of demand is 0.

Refer to the Information Provided in Figure 5