Figure 6-28 -Refer to Figure 6-28.Suppose a Tax of $4 Per Unit

question 130

Multiple Choice

Figure 6-28
-Refer to Figure 6-28.Suppose a tax of $4 per unit is imposed on this market.Which of the following is correct?

• A)Buyers and sellers will share the burden of the tax equally.
• B)Buyers will bear more of the burden of the tax than sellers.
• C)Sellers will bear more of the burden of the tax than buyers.
• D)Any of the above is possible in this market.

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Definitions:

Indifference Curve

A chart that depicts various combinations of products that a consumer sees as equally desirable, illustrating their preferences.

Marginal Utility

The additional satisfaction or value derived from consuming one more unit of a good or service.

Excise Tax

A tax imposed on specific goods, services, or activities, such as tobacco, alcohol, or gasoline, usually to raise revenue and discourage consumption of the taxed items.

Income Subsidy

Financial assistance provided by the government to individuals or groups to increase their income.