If the Demand for a Good Is Very Price-Elastic, Then

question 150

Multiple Choice

If the demand for a good is very price-elastic, then the imposition of a per-unit tax on that good will cause

• A)the buyers to bear a larger portion of the tax burden.
• B)the sellers to bear a larger portion of the tax burden.
• C)no one to bear any tax burden.
• D)the buyers and sellers to bear the tax burden evenly.
• E)no effect on the market for that good.

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Definitions:

Future Value

The predicted value of an investment or asset at a specified future date, considering factors like interest rates or returns, often used in financial planning and analysis.

Stated Rate of Interest

The annual interest rate declared on a financial instrument, not accounting for compounding or fees.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or making a profit.

Present Value

The valuation in current terms of a future amount of money or cash inflows, using a specified rate of return.