Consider an Excise Tax Imposed on Daily Parking Charges in the Downtown

question 74

Multiple Choice

Consider an excise tax imposed on daily parking charges in the downtown of a small city.Before the imposition of the tax,equilibrium price and quantity are $15 and 100 cars parked per day.(P = $15,Q = 100) .The city government then imposes a tax of $3 per car parked per day.Market equilibrium adjusts to P = $16 and Q = 95.Which of the following statements about the burden of the tax is correct?

• A)Supply is less elastic relative to demand and therefore more of the burden falls on the consumer.
• B)Supply is more elastic relative to demand and therefore more of the burden falls on the seller.
• C)Supply is more elastic relative to demand and therefore more of the burden falls on the consumer.
• D)Supply is less elastic relative to demand and therefore more of the burden falls on the seller.

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Definitions:

Neurotransmitter

Chemical substances in the body that transmit signals across synapses between neurons, playing a crucial role in brain function and communication.

Acetylcholine

A chemical messenger that plays a significant role in muscle activity and memory retention.

Dopamine

A neurotransmitter in the brain that plays a key role in regulating mood, motivation, pleasure, and reward.

Endorphins

These are neurotransmitters produced in the brain that act as natural painkillers and are also associated with feelings of pleasure and well-being.