Assuming the Demand Curve Is More Elastic (Flatter) Than the Supply

question 6

Multiple Choice

Assuming the demand curve is more elastic (flatter) than the supply curve, which of the following is true?

• A) The full tax is always passed on to the consumer no matter how flat (elastic) the demand curve is.
• B) The full tax is always passed on to the seller no matter how flat (elastic) the demand curve is.
• C) A smaller portion of sales tax is passed on to the consumer.
• D) It does not make any difference how flat (elastic) the demand curve is; the tax is always split evenly between buyer and seller.

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Definitions:

Process Costing

A costing method used for homogeneous products that are produced in a continuous process, assigning costs based on average production costs.

Conversion Costs

relate to expenses incurred in converting raw materials into finished goods, including labor and overhead.

Work in Process

Partially finished goods that are in the process of being converted into final products in manufacturing.

Equivalent Unit

A measure used in cost accounting to represent the amount of work done on partial units of output, making it possible to calculate costs in process costing systems.