May/June 2026 Paper 11

2026 · 30 questions · 30 parts · 30 marks

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15Indirect Taxes SubsidiesMedium1 mark
The market for good X is in equilibrium with 1000 units sold at a price of $10. The government puts a specific tax of $1 per unit on the producers of good X.
Which value for the price elasticity of demand for good X will generate the largest tax revenue?