For Any Given Tax,imposing a Tax in a Market with a Highly

question 130

Multiple Choice

For any given tax,imposing a tax in a market with a highly inelastic demand will:

• A)generate higher revenues than a market with an elastic demand.
• B)cause more deadweight loss than a market with an elastic demand.
• C)Both of these statements are true.
• D)Neither of these statements is true.

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Definitions:

Merchandising Company

A business entity that purchases finished products and sells them to consumers without changing the form or nature of the goods.

Service Company

A business that generates revenue through the provision of services rather than selling physical products.

Sales Returns And Allowances

Transactions where a customer returns goods to the seller or receives a reduction in the invoice price, thereby reducing the seller's sales revenue.

Sales Discounts

Reductions in the amount charged to customers as an incentive for early payment, recorded as a deduction from gross sales to calculate net sales.