If a Tax Is Imposed on a Market with Inelastic

question 143

Multiple Choice

If a tax is imposed on a market with inelastic demand and elastic supply,then

• A)buyers will bear most of the burden of the tax.
• B)sellers will bear most of the burden of the tax.
• C)the burden of the tax will be shared equally between buyers and sellers.
• D)it is impossible to determine how the burden of the tax will be shared.

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Definitions:

Expected Value

The anticipated value for a given investment or decision in probabilistic terms, calculated as the weighted average of all possible values.

Continuous Probability Distributions

Mathematical functions that describe the likelihood of any value within a continuous range occurring in a random variable.

Normally Distributed

A type of continuous probability distribution characterized by a bell-shaped curve symmetric about the mean.

Gasoline Prices

The cost per unit of gasoline, which can fluctuate based on factors like crude oil prices, taxes, demand, and supply situations.