There Would Be No Excess Burden from a Tax If

question 8

Multiple Choice

There would be no excess burden from a tax if demand were

• A) unitarily elastic.
• B) perfectly elastic.
• C) perfectly inelastic.
• D) upward sloping.

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Definitions:

Short-Term Creditors

Short-term creditors are lenders or suppliers to whom a company owes money that is due to be paid back within a short period, typically within one year.

Liquidity

A measure of how easily assets can be converted into cash without significant loss of value.

Supplier

A party that provides goods or services to another entity, typically in a B2B (business-to-business) relationship.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations, calculated by dividing current assets by current liabilities.