-If the Government Puts a $2 Excise Tax on a Product

question 127

Multiple Choice

-If the government puts a $2 excise tax on a product and as a result,price rises by $0.75,which of the following statements is correct?

• A)The sellers pay more of the tax than the buyers.
• B)The buyers pay more of the tax than the sellers.
• C)The government's tax revenue falls.
• D)The quantity demanded of the product falls by 37.5%.
• E)The quantity demanded of the product rises by 37.5%.

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Definitions:

Broker

A person or firm that acts as an intermediary between a buyer and seller, usually charging a commission.

Multiple Insurance Clause

A provision in insurance policies that outlines how claims will be handled when more than one policy covers the same loss.

Fidelity Insurance

A form of insurance coverage that protects businesses from losses due to fraudulent acts by employees, such as embezzlement or theft.

Proportionate Share

An individual's or group's fair or equitable portion of a whole, often related to shares in a company or distribution of assets.