Consider a 10% Excise Tax That Is Similarly Applied to Good

question 28

Multiple Choice

Consider a 10% excise tax that is similarly applied to good X,which has a price elasticity of 2.7,and to good Y,that has a price elasticity of 0.6.We can predict that the excess burden of this tax in the market for good X will be ________ the excess burden in the market for good Y.

• A)no larger than
• B)equal to
• C)smaller than
• D)larger than
• E)2.1 times the size of

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Definitions:

Psychotherapy

Therapy for mental disorders in which a person with a problem talks with a psychological professional.

Bilateral Anterior Cingulotomy

Psychosurgical technique in which an electrode wire is inserted into the anterior cingulate gyrus, with the guidance of magnetic resonance imaging, to destroy a very small portion of that brain area with electric current.

Major Depression

A mood disorder characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities.

Psychoanalysts

Professionals specializing in a branch of psychology that focuses on treating mental disorders by investigating the interaction of conscious and unconscious elements in the mind.