A Tax Is Imposed on Wine

question 80

Multiple Choice

A tax is imposed on wine. Under what circumstances will sellers bear the burden from this tax?

• A) when the demand for wine is perfectly inelastic
• B) when the demand for wine is perfectly elastic
• C) when the supply curve for wine is unit elastic
• D) when the supply curve for wine is perfectly elastic

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Definitions:

Sales/Total Assets

A financial ratio that measures how efficiently a company is using its assets to generate sales.

Pretax Profit

Earnings before tax, indicating the profitability of a business before accounting for tax obligations.

Net Profit

The amount of money earned by a company after all expenses and taxes have been subtracted from total revenue.

Leverage Ratio

A financial ratio indicating the degree to which a company or individual is financing its operations through debt, compared to its equity.