Suppose a Tax Is Imposed on Energy Drinks That Have

question 75

Multiple Choice

Suppose a tax is imposed on energy drinks that have a price elasticity of demand equal to 2,and a price elasticity of supply equal to 1.We would expect that

• A) the producers of energy drinks containing sugar would pay a larger portion of the tax.
• B) the consumer would pay a larger portion of the tax.
• C) the consumer would pay the entire tax.
• D) the producers of energy drinks containing sugar would pay the entire tax.

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Definitions:

Diffusion

The process by which molecules spread from areas of high concentration to areas of low concentration, often leading to equilibrium.

Osmosis

The process by which molecules of a solvent pass through a semipermeable membrane from a less concentrated solution into a more concentrated one.

Filtration

The process of separating solids from liquids or gases using a filter medium that allows only the fluid to pass through.

Active Transport

The movement of molecules across a cell membrane from a region of lower concentration to a region of higher concentration, requiring energy.