-If a Unit Excise Tax Is Placed on a Good

question 65

Multiple Choice

-If a unit excise tax is placed on a good for which the demand is very unresponsive to a price change, then

• A) the government generally pays the majority of the tax.
• B) the consumers generally pay the majority of the tax.
• C) the producers generally pay the majority of the tax.
• D) producers and consumers pay equal portions of the tax.

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Definitions:

Payee

The party in a financial transaction to whom money is paid or is to be paid.

Interest Income

Earnings received from deposit accounts or investments that yield interest, such as savings accounts, bonds, or loans.

Accounts Receivable

An asset account that records amounts a company has a right to receive because it has provided goods or services on credit.

Nontrade Receivables

Amounts owed to a company that are not related to the sale of goods or services, such as tax refunds or loans to employees.