If the Demand for a Product Is Perfectly Inelastic and the Supply

question 114

Multiple Choice

If the demand for a product is perfectly inelastic and the supply curve is upsloping,a $1 excise tax per unit of output will:

• A) raise price by less than $1.
• B) raise price by more than $1.
• C) raise price by $1.
• D) lower price by $1.

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Definitions:

Year 1

Often refers to the first year of operations for a business or the first year in a multi-year financial analysis.

Beginning Inventory

The value of inventory on hand at the start of an accounting period, used in calculating cost of goods sold.

Cost of Goods Sold

Direct financial expenditures related to the generation of a company’s saleable products, covering labor and materials.

Periodic Method

An inventory accounting method where updates to the inventory records are made periodically, typically at the end of the accounting period.