Other Things Being Equal, the More Inelastic the Demand for a Taxed

question 32

Multiple Choice

Other things being equal, the more inelastic the demand for a taxed good,

• A) the greater the portion of the tax paid by sellers.
• B) the greater the excess burden of the tax.
• C) the greater the portion of the tax paid by buyers.
• D) the less the portion of a tax on sellers that can be shifted to buyers.

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Definitions:

Net Income

The remaining earnings of a company after deducting all expenditures and taxes from the revenues.

Dividends

Distributions of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders, typically in the form of cash, stocks, or other assets.

Accrued Interest

Interest that has been earned but not yet received in cash or recorded, representing a liability for the payer and an asset for the receiver.

Semiannual Interest

Interest calculated and disbursed semi-annually.