Economics (AS & A Level) · Oct / Nov 2021 · Paper 12 · Question 18
9708Price elasticity, income elasticity and cross elasticity of demand
In an attempt to reduce crime, a government introduces a subsidy on the production of burglar alarms, but sales rise very little. Which possible characteristics of the good would lead to this outcome?
- Ahigh price elasticity of demand, high price elasticity of supply
- Bhigh price elasticity of demand, low price elasticity of supply
- Clow price elasticity of demand, high price elasticity of supply
- Dlow price elasticity of demand, low price elasticity of supply
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Correct answer: D. low price elasticity of demand, low price elasticity of supply
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