'Assume that the demand for entertainment is more elastic than the demand for petrol'.According to this statement, compared to the decline in purchases from a similar percentage tax on petrol, we would expect that a tax on entertainment will cause the quantity of entertainment purchased to decline:
A)more
B)less
C)the same
D)neither more nor less

Question

Quizplus · Accepted Answer

Since the demand for entertainment is more elastic than the demand for petrol, the same percentage tax on entertainment will have a greater impact on the quantity of entertainment purchased compared to petrol. Therefore, we would expect the quantity of entertainment purchased to decline more with a tax on entertainment.

'Assume That the Demand for Entertainment Is More Elastic Than