An Analysis of the Effect of Excise Taxes on Markets

question 21

Multiple Choice

An analysis of the effect of excise taxes on markets allows us to conclude that:

• A)when the price elasticity of supply is equal to zero,an excise tax falls entirely on the consumers.
• B)when the price elasticity of demand is lower than the price elasticity of supply,an excise tax falls mainly on the producers.
• C)whether the tax is levied on consumers or producers,the quantity sold will be the same.
• D)when the price elasticity of demand is higher than the price elasticity of supply,an excise tax falls mainly on the consumers.

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Definitions:

Rising Salt Dome

A geological formation where a column of salt moves upward through overlying sediments, often forming a dome-like structure.

Fault Zone

A fault zone is a region of the Earth's crust characterized by one or more faults, which are fractures along which there has been displacement of the sides relative to one another.

Unconformity

A surface within the rock record that represents a gap in the geological history due to erosion or non-deposition of sediments.

Petroleum

A naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons, used primarily as fuel and in chemical production.