When Demand Is Perfectly Elastic the Buyer Pays _____ of a Tax

question 171

Multiple Choice

When demand is perfectly elastic the buyer pays _____ of a tax.

• A)all
• B)most
• C)half
• D)less than half
• E)none

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Definitions:

Adverse Selection

A situation where there is an imbalance in information that results in high-risk parties being more likely to engage in transactions than low-risk parties, often observed in insurance markets.

Good Quality

The degree to which a product or service meets or exceeds customer expectations.

Moral Hazard

A situation where one party engages in risky behavior knowing that it is protected against the consequences, often due to asymmetric information.

Recklessly

Acting with a lack of concern for the risk or negative consequences of one's actions.