Suppose the Demand Curve for a Product Is Vertical and the Supply

question 179

Multiple Choice

Suppose the demand curve for a product is vertical and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

• A)sellers bear the entire burden of the tax.
• B)buyers bear the entire burden of the tax.
• C)the tax burden will be shared equally between buyers and sellers.
• D)buyers share the burden of the tax with the government.

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Definitions:

Partnership by Estoppel

A legal doctrine where a person acts or is treated as if they are a partner in a business, even though no formal partnership exists, leading to liability.

Written Partnership Agreement

A legal document outlining the terms, responsibilities, and profit-sharing mechanisms among partners in a business.

Legal Obligation to Indemnify

A requirement by law for one party to compensate another for losses or damages that have been incurred.

Co-owners

Individuals or entities who jointly own an asset or property, sharing the rights and responsibilities associated with ownership.