If the Elasticity of Supply Is Much Greater Than the Elasticity

question 51

Multiple Choice

If the elasticity of supply is much greater than the elasticity of demand,an excise tax levied on the suppliers will

• A)cause the suppliers to incur a greater burden of the tax than demanders
• B)cause the demanders to incur a greater burden of the tax than suppliers
• C)the burden of the tax will be shared equally between the suppliers and the demanders
• D)cause the entire burden of the tax to rest on the demanders
• E)Without more information as to the amount of the excise tax,who will incur a greater burden will be unclear

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Definitions:

Warranty Of Merchantability

A legal guarantee that a product sold by a merchant fits its ordinary purposes and meets the buyer’s expectations.

Breach

The violation or non-fulfillment of a legal obligation, agreement, or law.

Magnuson-Moss Act

A federal law in the United States that governs warranties on consumer products, aiming to protect consumers against deceptive warranty practices.

UCC

Uniform Commercial Code; a comprehensive set of laws governing all commercial transactions in the United States.