Suppose That in a Particular Market,the Demand Curve Is Highly

question 34

Multiple Choice

Suppose that in a particular market,the demand curve is highly elastic and the supply curve is highly inelastic.If a tax is imposed in this market,then

• A) the buyers will bear a greater burden of the tax than the sellers.
• B) the sellers will bear a greater burden of the tax than the buyers.
• C) the buyers and sellers are likely to share the burden of the tax equally.
• D) the buyers and sellers will not share the burden equally,but it is impossible to determine who will bear the greater burden of the tax without more information.

---

Definitions:

Diminishing Marginal Returns

Diminishing Marginal Returns is an economic principle stating that as additional units of a factor of production are added to a fixed amount of other factors, the incremental increase in output will eventually decrease.

Marginal Product

The additional output that results from using one more unit of a specific input, keeping other inputs constant.

Third Worker

In the context of labor and production, refers to the addition of a third employee in a process, which can affect productivity differently depending on the scenario.

Marginal Product

Additional output gained by employing one more unit of production.