If Supply Is Relatively Inelastic When Compared with Demand in a Perfectly

question 41

Multiple Choice

If supply is relatively inelastic when compared with demand in a perfectly competitive market,:

• A)consumers will share a larger burden of an excise tax than producers.
• B)consumers and producers will share the burden of an excise tax equally.
• C)producers will share a larger burden of an excise tax than consumers.
• D)the incidence of the tax cannot be determined without more information.

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Definitions:

Assets

Economic resources owned or controlled by an individual or entity that are expected to produce value or benefit in the future.

EBIT

Earnings Before Interest and Taxes, a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Interest

The charge for borrowing money or the return on invested capital, typically expressed as an annual percentage rate.

EBITDA Coverage Ratio

A financial metric that assesses a company's ability to pay off its debts, calculated by dividing EBITDA by total debt service costs.