If the Elasticity of Supply Is Much Greater Than the Elasticity

question 51

Multiple Choice

If the elasticity of supply is much greater than the elasticity of demand,an excise tax levied on the suppliers will

• A)cause the suppliers to incur a greater burden of the tax than demanders
• B)cause the demanders to incur a greater burden of the tax than suppliers
• C)the burden of the tax will be shared equally between the suppliers and the demanders
• D)cause the entire burden of the tax to rest on the demanders
• E)Without more information as to the amount of the excise tax,who will incur a greater burden will be unclear

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Definitions:

Uncollectible Accounts

Receivables that are deemed uncollectible and are written off as a loss due to the inability to collect the funds.

Allowance Account

An account used to offset the gross accounts receivable by the amount estimated to be uncollectible.

Accounts Receivable

Unsettled payments from customers to a business for goods delivered or services carried out.

Note Receivable

A financial asset representing a promise for future receipt of cash, typically arising from sales or loans, evidenced by a written promise to pay.