If the Supply of a Good Is Perfectly Inelastic, Then

question 11

Multiple Choice

If the supply of a good is perfectly inelastic, then suppliers will bear the full burden of an excise tax

• A)no matter how elastic the demand for the good is.
• B)only if demand is perfectly elastic.
• C)only if demand is perfectly inelastic.
• D)only if the government forbids them to raise the price of the good.

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Definitions:

Issuing Bonds

The process by which a company or government raises capital by selling bonds to investors, incurring debt that must be repaid over time with interest.

Stockholders

Individuals or institutions that own at least one share of a company's stock, essentially owning a portion of the company.

Tax Deductible

Refers to expenses that can be subtracted from gross income to determine taxable income, thereby reducing the overall tax liability.

Interest Expense

The cost incurred by an entity for borrowed funds, including loans, bonds, or lines of credit.