Figure 5.8 -Refer to Figure 5.8.Suppose the Market Is Initially in Equilibrium

question 155

Multiple Choice

Figure 5.8
-Refer to Figure 5.8.Suppose the market is initially in equilibrium at price P₁ and now the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax? For demand curve D₁

• A)the producer bears a greater share of the tax burden if the supply curve is S₂.
• B)the producer bears a greater share of the tax burden if the supply curve is S₁.
• C)the producer's share of the tax burden is the same whether the supply curve is S₁ or S₂.
• D)the producer bears the entire burden of the tax if the supply curve is S₁, and the consumer bears the entire burden of the tax if the supply curve is S₂.

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Definitions:

Unconditioned Response

An automatic, natural reaction to a stimulus that occurs without any need for prior learning.

Unconditioned Stimulus

An innate trigger that spontaneously and effortlessly evokes a reaction without the need for previous learning.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, comes to trigger a conditioned response.

Conditioned Stimulus

A formerly neutral signal that, after consistent association with an unconditioned stimulus, triggers a learned response.