The Following Question Are Based on the Following Diagram

question 28

Multiple Choice

The following question are based on the following diagram:

-The amount of tax shifted onto the seller is best illustrated by

• A) AB.
• B) DE.
• C) CE.
• D) DC.
• E) CF.

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Definitions:

Good Substitutes

Products or services that can be used in place of each other, having a high cross-elasticity of demand.

Income Elasticity Coefficient

A measure indicating how much the quantity demanded of a good responds to change in consumer income.

Recessions

Periods of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in successive quarters.

Income Elasticity

A measure of how much the demand for a product or service changes in response to changes in consumer income.