Suppose that the supply curve for gold is very steep (positively sloped, but almost...

Question

Suppose that the supply curve for gold is very steep (positively sloped, but almost
vertical).
 Would a Tax tend to have a relatively large or a relatively small effect upon the
quantity exchanged in the market? Would there tend to be a relatively large or a
elatively small effect upon the gross price paid by buyers? Upon the net price
eceived by sellers?
 Explain in terms of the underlying economic meaning.

Ans. Since the gold supply curve is steep, thus its supply elasticity or price elasticity is
quite low. Tax will reduce both the demand as well as supply of gold...

David · Accepted Answer

Suppose that the supply curve for gold is very steep (positively sloped, but almost 
vertical). 
 Would a Tax tend to have a relatively large or a relatively small effect upon the 
quantity exchanged in the market? Would there tend to be a relatively large or a 
relatively small effect upon the gross price paid by buyers? Upon the net price 
received by sellers? 
 Explain in terms of the underlying economic meaning. 
 
Ans. Since the gold supply curve is steep, thus its supply elasticity or price elasticity is 
quite low.

Suppose that the supply curve for gold is very steep (positively sloped, but almost vertical). Would a $Ttax tend to have a relatively large or a relatively small effect upon the quantity exchanged in...

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