Consider Two Increasing-Cost Competitive Industries (A and B)having Identical Supply

question 17

Multiple Choice

Consider two increasing-cost competitive industries (A and B) having identical supply curves.However,the demand curve faced by industry A is more inelastic than the demand curve of industry B.Which of the following is true if a per-unit excise tax is levied on the output of both the industries?

• A)The consumers of industry A's product will bear a greater burden of the tax than the producers.
• B)The consumers of industry A's product will bear a smaller burden of the tax than the producers.
• C)The consumers of industry B's product will bear a larger burden of the tax than the consumers of industry A.
• D)The consumers of industry B's product will bear the entire burden of the tax imposed on that product.

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Definitions:

Logos

A symbol or other design adopted by an organization to identify its products, uniform, vehicles, etc., sometimes referring to the logical appeal in rhetoric.

Ethos

A rhetorical appeal to authority or credibility, often used in persuasive writing and speech to establish trust with the audience.

Logos

An aspect of Aristotle's modes of persuasion, focusing on logic and reasoning to argue a point.