Suppose Someone Believes That If a Per-Unit Tax Is Placed

question 92

Multiple Choice

Suppose someone believes that if a per-unit tax is placed on the producers of good Y, the consumers of good Y will end up paying the full tax. This person assumes that the demand curve for good Y is

• A)elastic.
• B)perfectly inelastic.
• C)inelastic.
• D)perfectly elastic.
• E)unit elastic.

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Definitions:

Behavioral Economics

A field of economic research that examines how psychological, cognitive, emotional, cultural, and social factors affect economic decisions made by individuals and institutions.

Decision Making

The cognitive process of selecting a course of action among multiple alternatives.

Goods And Services

Products and activities that fulfill the wants and needs of consumers, with goods being tangible objects and services being intangible activities.

Prospect Theory

A behavioral economic theory that describes how people make choices when faced with uncertainty, emphasizing the psychological value of gains and losses rather than the final outcome.