When a Tax Is Levied on a Good or Service

question 110

Multiple Choice

When a tax is levied on a good or service,

• A) buyers and sellers generally share the burden of the tax.
• B) buyers always bear the burden of the tax.
• C) sellers always bear the burden of the tax.
• D) sellers bear some of the burden of the tax only if supply is perfectly elastic.

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Definitions:

Liquidity Ratios

Financial metrics used to determine a company's ability to pay off its short-term debts with its liquid assets, critical for assessing financial health.

Asset Management Ratios

Financial metrics that assess how efficiently a company is using its assets to generate revenue, including turnover ratios for receivables, inventory, and assets.

Leverage Ratios

Financial metrics used to assess the degree of debt in a company's capital structure and its ability to meet financial obligations.

Inventory Turnover

A measure of how quickly a company sells and replaces its stock of goods within a given period.