Use the Following to Answer Question(s): Tax Incidence

question 20

Multiple Choice

Use the following to answer question(s) : Tax Incidence

-(Exhibit: Tax Incidence) All other things unchanged, when a good or service is characterized by a relatively elastic supply, as shown in Panel _______ , the greater share of the burden of an excise tax imposed on it (shown by the tax wedge in each panel) is borne by _______.

• A) (a); buyers
• B) (b); sellers
• C) (b); buyers
• D) (a); sellers

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Definitions:

Allowance

A fixed amount of money allotted on a regular basis, typically for a specific purpose.

Individual Choices

Decisions made by individuals based on their preferences and constraints.

Economic Incentives

Factors, often financial or material, that motivate individuals or businesses to pursue certain actions or behaviors.

Exploiting Opportunities

The act of taking strategic actions to capitalize on favorable conditions or circumstances to achieve desired outcomes.