Which Generalization Is Incorrect

question 2

Multiple Choice

Which generalization is incorrect?

• A) Given supply, the more elastic the demand for a product, the larger is the portion of an excise tax that is shifted forward to consumers.
• B) Given demand, the more elastic the supply of a product, the larger is the portion of an excise tax that is borne by producers.
• C) Given supply, the more elastic the demand for a product, the larger is the portion of an excise tax that is borne by the sellers.
• D) Given demand, the less elastic the supply of a product, the larger is the portion of an excise tax that is shifted forward to consumers.

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Definitions:

Prospectus

A formal legal document that provides details about an investment offering to the public, often detailing the assets, risks, and objectives of the offering.

SEC

The Securities and Exchange Commission, a U.S. government agency responsible for enforcing federal securities laws and regulating the securities industry.

Securities Act of 1934

A U.S. law enacted to regulate the secondary trading of securities (stocks, bonds, etc.), establishing rules and procedures to prevent fraud and manipulation.

Underwriting

Underwriters (investment bankers) purchase securities from the issuing company and resell them. Usually, a syndicate of investment bankers is organized behind a lead firm.