If the price elasticity of demand for movie tickets is 3.0, then a new $1 tax on movie tickets would probably cause the price of a movie ticket to go up by less than $1.

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Quizplus · Accepted Answer

With a price elasticity of demand of 3.0, demand is highly elastic, meaning consumers are very responsive to price changes. Therefore, the burden of the tax would likely be shared between consumers and producers, with producers unable to pass the full $1 tax onto consumers without significantly reducing the quantity demanded.

If the Price Elasticity of Demand for Movie Tickets Is