A Given Per-Unit Excise Tax Will Increase the Short Run

question 2

Multiple Choice

A given per-unit excise tax will increase the short run product price by the highest amount when:

• A)demand is elastic and supply is inelastic.
• B)supply is inelastic and demand is elastic.
• C)demand is inelastic and supply is elastic.
• D)supply is perfectly inelastic and demand is elastic.

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Definitions:

Population

The complete set of items or individuals that are the objects of a statistical study.

Simple Random Sample

A subset of a larger population in which every member has an equal chance of being selected, ensuring the sample’s representativeness.

Annual Salary

The total amount of money that an individual earns in one year from their job before taxes and other deductions.

Sampling Distribution

The distribution of a statistic (such as the mean or variance) derived from a large number of samples of a specific size from a particular population.