If the Supply Curve Is Perfectly Elastic, the Burden of a Tax

question 163

Multiple Choice

If the supply curve is perfectly elastic, the burden of a tax on suppliers is borne:

• A) entirely by the suppliers.
• B) entirely by the consumers.
• C) mostly by the suppliers and partly by the consumers if the demand curve is inelastic.
• D) partly by the suppliers and mostly by the consumers if the demand curve is elastic.

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Definitions:

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not affect future decision-making but often do.

Information Overload

A situation where an individual is exposed to more information than they can process, leading to stress or decision paralysis.

Neuroticism

A personality trait associated with negative emotional states such as anxiety, depression, and vulnerability.

Negative Affectivity

A personality trait characterized by the predisposition to experience negative emotions and mood states.