When the Inelasticities of Demand and Supply Are Equal,the Tax

question 88

Multiple Choice

When the inelasticities of demand and supply are equal,the tax burden will be borne

• A)entirely by the seller.
• B)mostly by the seller.
• C)equally.
• D)mostly by the buyer.
• E)entirely by the buyer.

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Definitions:

Fixed Cost

Costs that do not vary with the level of output or production, such as rent or salaries.

Average Fixed Cost

Unchanging production costs (which do not fluctuate with production levels) divided by the output quantity.

Instructional Modules

Structured units of educational material or courses designed to teach a specific subject or skill.

Average Variable Cost

The total variable costs (costs that change with production levels) divided by the quantity of output produced.