If the Demand for a Good Is Highly Inelastic, a Tax

question 182

Multiple Choice

If the demand for a good is highly inelastic, a tax on the good

• A) places the burden of the tax equally on buyers and sellers
• B) permits sellers to pass most of the cost increase resulting from the tax on to the consumers of the product
• C) reduces the profits earned by sellers since they must write the check to pay the tax
• D) makes the demand more inelastic
• E) makes the demand more elastic

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