The Elasticities of Supply and Demand Are Important in Determining

question 93

Multiple Choice

The elasticities of supply and demand are important in determining the distribution of tax burden because they

• A) measure how much consumers are willing to pay or how much firms must receive in order to produce.
• B) reflect who actually pays the tax out of pocket.
• C) measure how responsive producers and consumers are to a change in price.
• D) reflect how much tax revenue is collected from the tax.
• E) determine who is legally responsible for remitting funds to the government.

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Definitions:

Redistribution of Income

Government policies or mechanisms aimed at adjusting the distribution of wealth among a population.

Well-organized Interest Groups

Organizations that coordinate the efforts of members to advocate or lobby for shared interests and goals in the policy-making process.

Rent-seeking Activities

Rent-seeking activities involve individuals or businesses trying to increase their share of existing wealth without creating new wealth, often through manipulation or exploitation of the economic environment.

Legal Structure

The organization of a business as determined by its legal status, such as a sole proprietorship, partnership, corporation, or LLC.