All Other Things Being Equal, Which of the Following Results

question 13

Multiple Choice

All other things being equal, which of the following results in the most tax burden for consumers in the case of a per-unit tax on a good?

• A)Perfectly elastic demand
• B)Relatively elastic demand
• C)Unit-elastic demand
• D)Relatively inelastic demand
• E)Perfectly inelastic demand

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Definitions:

Purely Competitive Industry

An industry characterized by many buyers and sellers, free entry and exit, and a standardized product, leading to firms being price takers.

Monopolist

A market participant that is the sole provider of a good or service, thus controlling the entire market and having the ability to set prices unilaterally.

Identical Costs

Refers to costs that are the same across different products, services, or processes.