A Tax Is Levied on Products a and B, Both

question 283

Multiple Choice

A tax is levied on products A and B, both of which have the same price elasticity of supply. The demand for A is more inelastic than is the demand for B. Other things constant, how will this affect the incidence of an excise tax on these products?

• A) Producers will bear a smaller share (and consumers a larger share) of the tax burden on A than B.
• B) Consumers will bear a smaller share (and producers a larger share) of the tax burden on A than B.
• C) The deadweight loss (or excess burden) will be larger for good A than B.
• D) All of the above are true.

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Definitions:

ShowMessageDialog

A method in Java Swing used to display a dialog box with a specified message to the user.

Sentence.replace()

A method in programming languages like Java that replaces part of a string with another string.

String.format()

A method in Java that returns a formatted string using the specified format string and arguments, similar to printf in C.

Sentence.indexOf()

A method in Java that returns the index within the string of the first occurrence of the specified character or substring.