The Surpluses Associated with a Binding Price Floor Will Be

question 77

Multiple Choice

The surpluses associated with a binding price floor will be the smallest when

• A) supply is highly elastic and demand is highly inelastic.
• B) both supply and demand are unit elastic.
• C) both supply and demand are highly inelastic.
• D) both supply and demand are highly elastic.
• E) supply is highly inelastic and demand is highly elastic.

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Definitions:

Revenue

The income generated from normal business operations and before any expenses are deducted.

Excise Tax

A tax imposed on specific goods, services, or activities, such as gasoline, cigarettes, or gambling, usually intended to discourage their use or to raise revenue.

Luxury Boats

Expensive, high-end boats equipped with superior amenities, designed for comfort, performance, and status.

Tax Burden

The measure of the total taxes paid by an individual, corporation, or another entity relative to its income, assets, or consumption levels.