A study of New York City (NYC) tax rates concluded that taxes on the nonmanufacturing sector should be higher since that sector has fewer alternatives.Manufacturers are more mobile and may move to avoid higher taxes.This means that
A)nonmanufacturing firms have a more elastic demand for the NYC locations.
B)manufacturing firms have an inelastic demand for the NYC locations.
C)nonmanufacturing firms have relatively inelastic demand for the NYC locations.
D)nonmanufacturing demand for the NYC locations is perfectly elastic.

Question

Quizplus · Accepted Answer

Nonmanufacturing firms having relatively inelastic demand for NYC locations means they are less sensitive to changes in tax rates because they have fewer alternatives to relocating, unlike manufacturing firms which can more easily move to avoid higher taxes.

A Study of New York City (NYC) Tax Rates Concluded