Suppose the Elasticity of Supply of Land Is 0 and Elasticity

question 29

Multiple Choice

Suppose the elasticity of supply of land is 0 and elasticity of demand is 2.If the government imposes a 10 percent tax on land,then

• A) buyers and sellers each pay 5 percent of the tax.
• B) buyers pay all of the tax.
• C) sellers pay all of the tax.
• D) sellers pay a smaller share of the tax than do buyers but both buyers and sellers pay some of the tax.
• E) buyers pay 1/2 of the tax.

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Definitions:

Voting Stock

Shares that grant the holder the right to vote on company matters, typically influencing board elections and corporate policy.

Cash Dividend

A payment made by a company out of its earnings to its shareholders, usually in the form of cash.

Net Income

The income a company retains following the deduction of all costs and taxes from its total earnings.

Goodwill

An intangible asset that arises when a company acquires another business for more than the value of its tangible and identifiable intangible assets.