When Demand for a Product Is Very Inelastic, the Burden

question 217

Multiple Choice

When demand for a product is very inelastic, the burden of a tax falls mainly on

• A)producers.
• B)consumers.
• C)tax collectors.
• D)people who drop out of the market.

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Definitions:

Depreciation Expense

The systematic allocation of the depreciable amount of an asset over its useful life, representing wear and tear or obsolescence.

Profit on Sale-Leaseback

This refers to the gain a company realizes when it sells an asset and immediately leases it back from the buyer, thus continuing to use the asset without owning it.

Amortization

A process of gradually writing off the initial cost of an asset over a period.