If a $5,000 Tax Is Placed Legally (Statutorily) on the Sellers

question 278

Multiple Choice

If a $5,000 tax is placed legally (statutorily) on the sellers of new automobiles and as a result the price of automobiles to consumers rises by $4,000, then the actual burden of the tax

• A) falls completely on automobile buyers.
• B) falls completely on automobile sellers.
• C) is $4,000 on automobile buyers and $1,000 on sellers.
• D) is $1,000 on automobile buyers and $4,000 on sellers.

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Definitions:

Unregulated Monopolist

A monopoly that operates without government regulation, potentially leading to unfair pricing and poor service.

Market Efficiency

A condition where all available information is already reflected in asset prices, and it's impossible to achieve consistently higher returns.

Competitive Price-Taker

A market participant that accepts prevailing market prices without having the influence to alter them, typically due to the presence of numerous sellers and buyers.

Cost Curves

Graphical representations that show how the cost of producing a good or service varies with the quantity produced.