Suppose Buyers of Vodka Are Required to Send $1

question 322

Multiple Choice

Suppose buyers of vodka are required to send $1.00 to the government for every bottle of vodka they buy.Further,suppose this tax causes the effective price received by sellers of vodka to fall by $0.60 per bottle.Which of the following statements is correct?

• A) This tax causes the supply curve for vodka to shift upward by $1.00 at each quantity of vodka.
• B) The price paid by buyers is $0.40 per bottle more than it was before the tax.
• C) Sixty percent of the burden of the tax falls on buyers.
• D) All of the above are correct.

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Definitions:

Experimental

Relating to a controlled study involving variables manipulated to determine cause-and-effect relationships.

Longitudinal

Describes research or analysis that takes place over a long period of time, observing the same subjects to detect changes or developments.

Correlation Coefficient

Any positive or negative relationship between two variables. Correlational evidence cannot prove causation, but only that two variables vary together.

Statistically Significant

Refers to a result that is unlikely to have occurred by chance alone, according to a predefined threshold in probability.