If the Demand for a Product Is Perfectly Elastic, a Tax

question 59

Multiple Choice

If the demand for a product is perfectly elastic, a tax of $1 per unit imposed on sellers will

• A)increase the market price by $1 per unit.
• B)increase the market price by less than $1 per unit.
• C)decrease the market price by $1 per unit.
• D)decrease the market price by less than $1 per unit.
• E)not affect the market price.

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Definitions:

Retirement Income

The financial income one receives after retiring from active employment, which can come from pensions, savings, investments, and government programs.

Social Security Benefits

Government-financed programs providing retirement, disability, survivorship, and death benefits to eligible individuals.

Exempt Amount

The portion of income or value that is not subject to tax or is excluded from calculation under certain conditions or allowances.

Family And Medical Leave Act

A U.S. law that provides employees with unpaid, job-protected leave for family and medical reasons, with continuation of group health insurance coverage.