Figure 6-17 -Refer to Figure 6-17.How Is the Burden of the Tax

question 496

Multiple Choice

Figure 6-17

-Refer to Figure 6-17.How is the burden of the tax shared between buyers and sellers? Buyers bear

• A) three-fourths of the burden, and sellers bear one-fourth of the burden.
• B) two-thirds of the burden, and sellers bear one-third of the burden.
• C) one-half of the burden, and sellers bear one-half of the burden.
• D) one-fourth of the burden, and sellers bear three-fourths of the burden.

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Definitions:

Long Run

A period of time sufficient for all markets to adjust to changes, including the reallocation of resources and entrance or exit of firms in an industry.

Perfectly Competitive Industries

Markets where no single buyer or seller has the power to influence prices, and where products are homogeneous and information is freely available.

Easily Enter And Exit

A term used to describe a market condition where barriers to entry and exit are low, allowing for free movement of firms into and out of the industry.

Homogeneous Products

Products that are identical in quality and cannot be distinguished by consumers, making them perfect substitutes.