When a Tax Is Imposed on a Good for Which

question 91

Multiple Choice

When a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic,

• A)buyers of the good will bear most of the burden of the tax.
• B)sellers of the good will bear most of the burden of the tax.
• C)the effective price paid by buyers of the good will decrease.
• D)the size of the market for the good will expand.

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Definitions:

Adjusting Entries

Toward the end of an accounting period, entries are made to attribute revenues and expenditures to the period in which they essentially occurred.

Stockholders' Equity

The residual interest in the assets of the entity after deducting liabilities, representing the ownership interest of shareholders.

Depreciation Expense

The amount of an asset’s cost that is allocated as an expense over a specific accounting period, reflecting its usage and wear and tear.