When a Tax Is Imposed on a Good for Which

question 50

Multiple Choice

When a tax is imposed on a good for which both demand and supply are very elastic,

• A)sellers effectively pay the majority of the tax.
• B)buyers effectively pay the majority of the tax.
• C)the tax burden is equally divided between buyers and sellers.
• D)None of the above is correct;further information would be required to determine how the burden of the tax is distributed between buyers and sellers.

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