The More Price-Elastic the Demand of a Taxed Item, the Lower

question 22

True/False

The more price-elastic the demand of a taxed item, the lower the excess burden of a tax on the sale of that item.

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Definitions:

College Tuition

The fee that students pay to attend a college or university, covering costs such as instruction, facilities, and sometimes room and board.

Supply

The total amount of a specific good or service that is available to consumers at a given price level and time.

Elastic

Describing a situation where the demand or supply for a good or service is sensitive to changes in price.

Supply of Cars

The total number of cars that manufacturers are willing and able to sell at a given price level in a given period.