The More Elastic the Supply of a Product, the More

question 94

Multiple Choice

The more elastic the supply of a product, the more likely it is that the

• A) burden of a tax on the product will fall on sellers.
• B) burden of a tax on the product will fall on buyers.
• C) burden of a tax on the product will fall equally on both buyers and sellers.
• D) deadweight loss of the tax will be smaller.

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Definitions:

Market Making

A financial service activity where a firm quotes both buy and sell prices for financial instruments, facilitating liquidity and trading activity in the market.

Transaction Costs

Expenses incurred when buying or selling goods or services, which may include fees, taxes, or other costs beyond the price of the product itself.

Wealth

The total value of all financial assets and tangible possessions owned by an individual or entity after deducting liabilities.

Ask

The lowest price a seller is willing to accept for a given asset in financial markets; also known as the offer price.