Which of the Following Statements Is TRUE

question 25

Multiple Choice

Which of the following statements is TRUE?
I. Buyers bear the majority of the tax burden if the tax is originally imposed on buyers.
II. Buyers bear the majority of the tax burden if the tax is originally imposed on sellers.
III. Buyers and sellers will always bear equal amounts of the tax burden.
IV. Buyers and sellers will jointly bear the tax.

• A) I only
• B) II only
• C) III only
• D) IV only

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Definitions:

Prices

The total monetary value expected, called for, or delivered in payment for an object.

Laspeyres Price Index

A price index used to measure the change in the cost of purchasing a fixed basket of goods and services over time, based on the quantities purchased in the base period.

Consumption Bundle

A set of goods or services that an individual or household chooses to consume within a given period, reflecting their preferences and budget constraint.

Prices

Monetary values assigned to goods and services, determining what amount of money is needed to purchase them.