If the Price of a Good Is Not Affected by a Tax

question 120

Multiple Choice

If the price of a good is not affected by a tax, then

• A)supply is perfectly elastic.
• B)demand is perfectly elastic.
• C)the elasticity of supply is greater than elasticity of demand.
• D)demand is unit elastic.
• E)supply is unit elastic.

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Definitions:

Permanent/Temporary

Pertaining to accounts in accounting where permanent accounts are balance sheet accounts that carry over balances into the next financial period, and temporary accounts are reset or closed to equity through retained earnings at the end of a period.

Normal Balance

The side of an account (debit or credit) where increases in the account are recorded, reflecting the nature of the account.

Financial Statement

A formal record of the financial activities and position of a business, person, or other entity, typically including income statement, balance sheet, and cash flow statement.

Permanent/Temporary

Terms used to differentiate between accounts that remain open over fiscal periods (permanent) and those closed at the end of a period (temporary).