Use the Figure Below to Answer the Following Question(s)

question 85

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 4-7
-Refer to Figure 4-7. Which of the following is true for the tax illustrated?

• A) The tax increases the price of gasoline by $.60.
• B) Since the demand for gasoline is more inelastic than the supply, consumers bear most of the burden of the tax.
• C) Since the demand for gasoline is more elastic than the supply, consumers bear most of the burden of the tax.
• D) Since the supply of gasoline is highly inelastic, the primary burden of the tax is imposed on the suppliers of gasoline.

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Definitions:

Average Variable Cost

The cost variable per unit of output produced, calculated by dividing total variable costs by the quantity of output.

Economic Losses

The reduction in financial wealth, goods, or services that results from an event or decision.

Long Run Market Supply Curve

A curve showing the relationship between the price of a good and its supply over a longer period, when all input factors can be varied.

Limited Quantities

A restricted amount of a product or resource available for consumption or use.