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?
A.
B.
C.
D.
Exam No：9708_w21_qp_12 Year：2021 Question No：18
Answer:
D
Knowledge points:
2.2.1 definition of price elasticity, income elasticity and cross elasticity of demand (PED, YED, XED)
2.2.4 descriptions of elasticity values: perfectly elastic, (highly) elastic, unitary elasticity, (highly) inelastic, perfectly inelastic
2.3.1 definition of price elasticity of supply (PES)
2.3.3 significance of relative percentage changes, the size and sign of the coefficient of price elasticity of supply
3.2.2 impact and incidence of subsidies
Solution:
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