If an Excise Tax Is Placed on a Product That

question 133

Multiple Choice

If an excise tax is placed on a product that has a perfectly inelastic demand, then:

• A) the entire tax will be paid by the consumer.
• B) the entire tax will be paid by the producer.
• C) the consumer and producer will each pay a share of the tax.
• D) the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply.

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Definitions:

Productive Contributions

Inputs or actions by individuals or entities that add value to the production process, resulting in the creation of goods or services.

Cardiovascular Risk

The likelihood of an individual experiencing cardiovascular events such as heart attack or stroke, often assessed based on factors like age, genetics, lifestyle, and medical history.

Sedentary

A lifestyle characterized by a significant amount of sitting or lying down with minimal physical activity, often linked to adverse health outcomes.

Social Support

The perception or reality of being cared for and having assistance available from other people, which can significantly impact health and well-being.