Which of the Following Generalizations About the Burden of an Excise

question 14

Multiple Choice

Which of the following generalizations about the burden of an excise tax is correct?

• A) The more inelastic the supply of a product, the larger the portion of an excise tax will be paid by buyers.
• B) The more inelastic the demand for a product, the larger the portion of an excise tax will be paid by buyers.
• C) The more elastic the supply of a product, the smaller the portion of an excise tax will be paid by buyers.
• D) The burden of an excise tax on a product is independent of the elasticity of the supply and demand for the product on which the tax is levied.

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Definitions:

Time Charges

Fees based on the amount of time spent to perform a service, often used in professional services like law and accounting.

Hourly Labour Cost

The total expense for an employer of paying hourly wages to employees, including benefits and taxes.

Profit Margin

A financial metric that calculates the amount of net income generated as a percentage of revenues.

Objective Function

A mathematical function used in decision-making processes, often in optimization and linear programming, representing the goal to be achieved, such as minimizing costs or maximizing profits.