Statement I: a Tax Increase on a Product Is Usually

question 72

Multiple Choice

Statement I: A tax increase on a product is usually borne by the buyer.
Statement II: The supply curve is usually more elastic in the short run than the long run.

• A)Statement I is true and statement II is false.
• B)Statement II is true and statement I is false.
• C)Both statements are true.
• D)Both statements are false.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or sales, such as materials and labor.

Fixed Costs

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

Total Cost

The sum of all costs incurred in the production of goods or services, including fixed and variable costs.

Variable Costs

Costs that change directly in proportion to changes in the level of production or activity within a business.