Which of the Following Statements About the Effects of a Tax

question 71

Multiple Choice

Which of the following statements about the effects of a tax on a good is true?

• A)A 10-cent tax charged to a merchant for every bag of potato chips the merchant sells is paid entirely by the merchant.
• B)When price elasticity of supply is very high, the deadweight loss from a per-unit tax on a good is relatively low.
• C)When price elasticity of demand is very low, the deadweight loss from a per-unit tax on a good is relatively high.
• D)The greater the price elasticity of demand for a good, the greater the cost to society of a tax on that good.
• E)A $1,000 tax imposed on car dealers for every car sold will cause the prices of cars to rise $1,000.

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Definitions:

Recall

The cognitive process of retrieving information from memory that has been previously learned or experienced.

Eyewitness

A person who has seen something happen and can give a first-hand account of it, often in the context of criminal justice to help identify suspects or recount events.

Nonsense Syllables

Sequences of letters that do not form recognized words, often used in memory and learning experiments.

Hermann Ebbinghaus

A German psychologist known for his pioneering work in the study of memory and the discovery of the forgetting curve.