Suppose a $1 Tax Is Placed on a Good

question 95

Multiple Choice

Suppose a $1 tax is placed on a good. The more elastic the supply of the good, the

• A) smaller the decrease in the quantity sold.
• B) more of the tax will be paid by the sellers.
• C) larger the increase in the after- tax price.
• D) less of the tax will be paid by the buyers.

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Definitions:

Null Hypothesis

In statistical hypothesis testing, it is the hypothesis that there is no significant difference or effect, serving as the default or initial assumption.

Test Statistic

A value calculated from sample data during a hypothesis test. It is used to determine whether to reject the null hypothesis.

Nonrejection Region

The range of values in hypothesis testing for which the null hypothesis is not rejected, indicating no statistical significance difference.

Z.TEST

A statistical test used to determine whether there is a significant difference between a sample mean and a known population mean, assuming a normal distribution.