If the Demand for a Product Is Perfectly Elastic and Supply

question 229

Multiple Choice

If the demand for a product is perfectly elastic and supply is upsloping, a $1 excise tax per unit on suppliers will

• A) not raise price at all.
• B) lower price by $1.
• C) raise price by more than $1.
• D) raise price by $1.

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Definitions:

Net Income

The total profit (or loss) of a company after all expenses and taxes have been subtracted from total revenues.

Net Sales

The total revenue generated from sales of goods or services, minus returns, allowances, and discounts.

Price-Earnings Ratio

A measure used to value a company that shows how much investors are willing to pay per dollar of earnings.

Earnings Per Share

A company's profit divided by the outstanding shares of its common stock, indicating profitability.