Tax Incidence Is the

question 65

Multiple Choice

Tax incidence is the

• A) division of the burden of a tax between the buyer and the seller.
• B) burden buyers have to absorb from a tax on goods and services.
• C) lost revenue the government endures from goods and services that are not taxed.
• D) deadweight loss created by a tax.
• E) burden sellers have to absorb from a tax on goods and services.

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Definitions:

Monopolistically Competitive

A marketplace configuration in which a wide variety of firms supply products that are analogous but not identical, thereby granting them a modicum of market influence.

Elastic

A characteristic of goods where their demand or supply changes significantly when the price changes.

Monopolistic Competitor

A market structure where many firms offer products or services that are similar but not perfect substitutes, allowing for some degree of market power.

Excess Capacity

describes a situation where a firm produces less than its total output capacity, usually resulting in inefficiencies and higher production costs.