Consider an Excise Tax Imposed on Daily Parking Charges in the Downtown

question 74

Multiple Choice

Consider an excise tax imposed on daily parking charges in the downtown of a small city.Before the imposition of the tax,equilibrium price and quantity are $15 and 100 cars parked per day.(P = $15,Q = 100) .The city government then imposes a tax of $3 per car parked per day.Market equilibrium adjusts to P = $16 and Q = 95.Which of the following statements about the burden of the tax is correct?

• A)Supply is less elastic relative to demand and therefore more of the burden falls on the consumer.
• B)Supply is more elastic relative to demand and therefore more of the burden falls on the seller.
• C)Supply is more elastic relative to demand and therefore more of the burden falls on the consumer.
• D)Supply is less elastic relative to demand and therefore more of the burden falls on the seller.

---

Definitions:

Hyperlinks

Anchors or references that, when clicked on, will navigate the user to another location or document, often on the internet.

Style Set

Style Set in document editing programs refers to a collection of formatting choices that can be applied to text and documents for consistency.

Word Document

A digital document format created by Microsoft Word or compatible software, used for text processing.

Webpage

An individual document or single entity on the World Wide Web, which can be accessed through a web browser by entering a specific URL.