Relating to the Economics in Practice on page 340: Europe has a carbon tax, and electricity producers are among the largest of the carbon producing firms. The carbon tax increased the price of electricity, and researchers found that the amount of the tax that was actually passed through to consumers reflected a ________ aggregate demand for electricity.
A) perfectly inelastic
B) very inelastic
C) slightly elastic
D) unit elastic

Question

Quizplus · Accepted Answer

The correct answer is B) very inelastic, because the fact that a significant portion of the carbon tax was passed through to consumers indicates that the demand for electricity is very inelastic. This means consumers continue to buy electricity even as its price increases, likely due to the lack of close substitutes for electricity and its necessity.

Relating to the Economics in Practice on Page 340: Europe