The Demand Curve for Pizza Is Downward Sloping and the Supply

question 73

Multiple Choice

The demand curve for pizza is downward sloping and the supply curve is upward sloping. If the government imposes a $2 tax on a pizza, ________ the tax.

• A) only producers pay
• B) the government pays
• C) both producers and consumers pay part of
• D) only consumers pay
• E) neither producers nor consumers pay part of

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Definitions:

Option Contract

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a set price within a specific period.

European Option

A type of option contract that can only be exercised at the expiration date, not before.

American Option

A type of options contract that allows holders to exercise their right to buy or sell the underlying asset at any time before the expiration date.

European Option

A type of financial derivative that gives an investor the right, but not the obligation, to buy or sell an asset at a specified price on the option's expiration date.