If a $5,000 Tax Is Placed Legally (Statutorily) on the Sellers

question 278

Multiple Choice

If a $5,000 tax is placed legally (statutorily) on the sellers of new automobiles and as a result the price of automobiles to consumers rises by $4,000, then the actual burden of the tax

• A) falls completely on automobile buyers.
• B) falls completely on automobile sellers.
• C) is $4,000 on automobile buyers and $1,000 on sellers.
• D) is $1,000 on automobile buyers and $4,000 on sellers.

---

Definitions:

Input Prices

The cost of goods, services, and materials that are used to produce other goods or services.

Suppliers' Expectations

The anticipations or beliefs of suppliers about the future conditions of the market that can influence their decisions on production and pricing.

Price of the Good

The amount of money required to purchase a specific product or service in the market.

Resources Used

This term encompasses all the inputs, including labor, capital, and natural resources, utilized in the production of goods and services.