The Supply Curve for a Product Has Infinite Elasticity

question 123

Multiple Choice

The supply curve for a product has infinite elasticity. An excise tax is levied on the product. The likely effect will be to

• A)reduce the amount the producer receives for each unit sold by the amount of the tax.
• B)increase the price the consumer pays per unit by the amount of the tax.
• C)increase the price to consumers by an amount less than the tax.
• D)increase the amount received by producers by less than the tax.

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Definitions:

Financing Activities

Transactions and business events that affect long-term liabilities and equity of a company, including issuance of shares, buyback of shares, and loans taken or given.

Operating Activities

Business activities directly related to the production and delivery of goods and services.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the asset's wear and tear, deterioration, or obsolescence.

Accounts Payable

Liabilities of a business that represent amounts owed to creditors for goods and services the company has received but not yet paid for.