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

question 79

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.(P = $15,Q = 100) .The city government imposes a tax of $3 per car parked per day.Market equilibrium adjusts to P = $18 and Q = 100.Which of the following statements about the burden of the tax is correct?

• A)Price elasticity of supply is 0 and therefore the entire burden of the tax falls on the consumer.
• B)Elasticity of demand is 0 and therefore the entire burden of the tax falls on the consumer.
• C)Elasticity of supply is 1 and therefore the entire burden of the tax falls on the seller.
• D)Price elasticity of demand is 1 and therefore the entire burden of the tax falls on the seller
• E)The burden of the tax is shared equally by the seller and the consumer.

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Definitions:

Reproductive Success

The success an individual has in passing its genes to the next generation, often measured by the number of offspring that survive to reproduce.

Heritable Variation

Differences in genetic information that are passed from parents to offspring through reproduction, contributing to genetic diversity within a population.

Allopatric Speciation

Model that proposes that new species arise due to an interruption of gene flow between populations that are separated geographically.

Geographic Separation

The physical separation of populations by geographic barriers that lead to the formation of distinct species over time.