It Does Not Matter Whether a Tax Is Levied on the Buyers

question 14

Multiple Choice

It does not matter whether a tax is levied on the buyers or the sellers of a good because

• A)sellers always bear the full burden of the tax.
• B)buyers always bear the full burden of the tax.
• C)buyers and sellers will share the burden of the tax.
• D)None of the above is correct;the incidence of the tax does depend on whether the buyers or the sellers are required to pay the tax.

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Definitions:

Expected Dollar Return

The forecasted amount of money in dollars that an investment is expected to return over a specific period.

Rights Offering

A way for companies to raise capital by giving existing shareholders the right to purchase additional shares at a discount.

Subscription Price

The cost at which investors can buy shares or units of an investment, often seen in mutual funds or newly issued stocks.

Shares

Units of ownership in a corporation or financial asset, giving holders a proportion of the company's profits and assets.