The Incidence of a Tax Is Unrelated to

question 12

Multiple Choice

The incidence of a tax is unrelated to

• A) how responsive producers are to the tax.
• B) how responsive consumers are to the tax.
• C) the elasticity of supply.
• D) the elasticity of demand.
• E) who pays the tax out of pocket.

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Definitions:

Discount Rates

Interest rates used to determine the present value of future cash flows, important in finance for valuation and risk assessment purposes.

Cost Of Capital

The earnings rate a business must achieve on its investments to keep its market value stable and entice capital.

Debt And Equity

The two primary ways a company finances its operations, through borrowing money (debt) and selling shares (equity).

Use Of Funds

The detailed explanation of how a business or individual plans to allocate capital or revenue toward specific expenditures.