Suppose the Demand for Barley Is Perfectly Elastic

question 129

Multiple Choice

Suppose the demand for barley is perfectly elastic.The supply curve of barley is upward sloping.If a tax is imposed on barley,

• A) barley sellers pay the entire tax.
• B) barley buyers pay the entire tax.
• C) the government pays the entire tax.
• D) the tax is split evenly between barley buyers and sellers.
• E) who pays the tax depends on whether the government imposes the tax on barley sellers or on barley buyers.

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Definitions:

Transfer Prices

Prices charged in the sale or transfer of goods and services between departments or divisions within the same company, often used for accounting or tax purposes.

Parts Division

A specialized unit or department within a company that focuses on the production or distribution of spare parts for products or equipment.

Machine Division

A segment within a manufacturing firm that focuses on the operation and maintenance of machinery.

Return On Investment (ROI)

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the return of the investment by its cost.