When a Tax Is Imposed on the Producers of a Product

question 21

Multiple Choice

When a tax is imposed on the producers of a product, which of the following is incorrect?

• A)The consumers and producers each bear some part of the burden.
• B)If the demand curve is relatively inelastic, the burden borne by consumers increases.
• C)If the supply curve is relatively elastic, the burden borne by consumers increases.
• D)If the tax is levied on producers, the producers bear the burden of the tax; if the tax is levied on consumers, the consumers bear the burden of the tax.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense charged against an asset over its useful life, reducing its book value.

Liability Account

An accounting record that represents an obligation to pay money to another party, reflects a company's debts or financial obligations.

Performance Obligation

A commitment in a contract to provide a distinct good or service to a customer, which is a key concept in recognizing revenue.