The Government of Healthyland Imposes a Tax on Sellers of Salt

question 247

Multiple Choice

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. With the tax, the price of salt paid by buyers in Healthyland is

• A) $0.40 per pound.
• B) $0.45 per pound.
• C) $0.35 per pound.
• D) $0.50 per pound.

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Definitions:

Automatic Perfection

A legal condition in which a security interest in a collateral automatically becomes effective without the need for any further action, under certain conditions, once it attaches.

Principal Debtor

The main individual or entity obligated to repay a debt on which a security may be claimed.

Surety

A person or entity that takes responsibility for another's performance of an obligation, such as the payment of a debt.

Payment

The transfer of money, goods, or services as compensation for an obligation or debt.