Suppose the Demand Curve for a Good Is Highly Elastic

question 33

Multiple Choice

Suppose the demand curve for a good is highly elastic and the supply curve is highly inelastic. If the government taxes this good,

• A) buyers and sellers will each share 50 percent of the burden, regardless of the elasticities of the demand and supply curves.
• B) sellers will bear a larger share of the tax burden.
• C) the distribution of the burden will depend upon whether the buyers or the sellers are required to send the tax to the government.
• D) buyers will bear a larger share of the tax burden.

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Definitions:

Activity Rates

The cost driver rates used in activity-based costing to allocate expenses to products or services based on their consumption of activities.

Number of Guests

The count of attendees or visitors, often used in contexts such as hospitality, events, or services to estimate demand or capacity needs.

Supporting Assembly

A process or component that is part of the larger production of a final product, aiding in the main product's assembly or functionality.

Activity-Based Costing

A costing methodology that assigns costs to products and services based on the activities and resources that go into producing them.