The Sales Tax

question 45

Multiple Choice

The sales tax

• A) is the major source of revenue for local government.
• B) is never applied to food or medical purchases.
• C) is usually at the rate of 1-2 percent.
• D) is completely shifted to the consumer.
• E) imposes a relatively greater burden on the poor.

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Definitions:

Completely Inelastic

A situation in which the demand or supply for a good or service is totally unresponsive to price changes.

Inelastic

Describes a condition where the demand or supply for a good or service is not significantly changed by changes in price.

Elastic

Elasticity in economics refers to the responsiveness of demand or supply to changes in price or income.

Completely Inelastic

Describes a situation where the demand or supply for a good or service does not change in response to changes in price.