Suppose the Elasticity of Demand for a Product Is 0

question 57

Multiple Choice

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1.If the government imposes a tax on the product,then

• A) buyers and sellers pay exactly the same share of the tax.
• B) buyers pay all of the tax.
• C) sellers pay all of the tax.
• D) buyers pay a smaller share of the tax than do sellers, but both buyers and sellers pay some of the tax.
• E) because the elasticity of demand is zero, the government collects no revenue from this tax.

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Definitions:

Total Manufacturing Cost

The aggregate sum of all costs directly involved in the production of goods, including raw materials, labor, and manufacturing overhead.

Underapplied Manufacturing Overhead

A scenario in which the designated costs for manufacturing overhead are below the overhead expenses that have been actually incurred.

Cost of Goods Manufactured

The total production cost of goods completed during a specific period, including materials, labor, and overhead costs.

Adjusted Cost of Goods Sold

This refers to the cost of goods sold figure after adjustments for any changes in inventory or other factors affecting the cost of goods produced and sold.