Those with More Inelastic Demands Will Bear a Larger Burden

question 37

Multiple Choice

Those with more inelastic demands will bear a larger burden of a tax because they:

• A) have more buying power.
• B) have more income.
• C) will switch to other products with a tax.
• D) have fewer substitutes for that good.

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Definitions:

Equilibrium Price

The price at which the quantity of a good demanded equals the quantity supplied, leading to a stable market condition.

Federal Tax Policy

The set of laws and regulations established by the federal government to determine the amount of tax to be levied on individuals, corporations, and other entities.

Health Insurance Premiums

The periodic payments made to an insurance company to maintain active health coverage.

Taxable Income

Taxable income is the amount of an individual's or a corporation's income used to determine how much tax will be owed to the federal, state, or other governmental entity.