Consumers Will Always Pay the Entire Amount of a Specific

question 113

Multiple Choice

Consumers will always pay the entire amount of a specific tax whenever

• A) demand is perfectly inelastic.
• B) supply is perfectly elastic.
• C) Both A and B above.
• D) Either A or B above but not at the same time.

---

Definitions:

Discount Rate

The interest rate applied in determining the current valuation of future cash flows via discounted cash flow analysis.

Annual Cash Operating Costs

Annual Cash Operating Costs represent the total amount of money a business spends on operating activities during a year, excluding non-cash expenses.

Salvage Value

The projected value left in an asset after it has completed its useful life.

Net Present Value

A calculation that compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account.