If the Demand for Good X Is Perfectly Inelastic and a Tax

question 186

Multiple Choice

If the demand for good X is perfectly inelastic and a tax is levied on the producers of each unit:

• A)consumers pay the entire tax,and deadweight loss will occur because the equilibrium quantity of good X falls.
• B)consumers pay the entire tax,and there is no deadweight loss because the equilibrium quantity of good X remains constant.
• C)consumers and producers share the burden of the tax,and there is no deadweight loss because the equilibrium quantity of good X remains constant.
• D)producers pay the entire tax,and deadweight loss will occur because the equilibrium quantity of good X falls.

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Definitions:

Quarterly Dividend

A payment made by a corporation to its shareholders, typically every three months, as a distribution of profits.

Shares

Units of ownership interest in a corporation or financial asset, representing a portion of a company's equity capital.

Quarterly Dividends

Payments made by a corporation to its shareholders, usually on a quarterly basis, from its profits or reserves.

Capital Gains

The profit from the sale of assets or investments when the selling price exceeds the original purchase price.