If the Supply of a Good Is Perfectly Inelastic, Then

question 11

Multiple Choice

If the supply of a good is perfectly inelastic, then suppliers will bear the full burden of an excise tax

• A)no matter how elastic the demand for the good is.
• B)only if demand is perfectly elastic.
• C)only if demand is perfectly inelastic.
• D)only if the government forbids them to raise the price of the good.

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Definitions:

Semiannual Interest

Interest that is calculated and paid twice a year on a loan or investment.

Premium Amortization

Premium amortization is the gradual reduction of the premium paid above the par value of a bond, allocated over the bond's life.

Bond Premium

The amount by which the market price of a bond exceeds its face value, typically occurring when the bond's interest rate is higher than the current market interest rate.

Interest Expense

The cost incurred by an entity for borrowed funds, which is considered a non-operating expense shown on the income statement.