If an Excise Tax Is Placed on a Product That

question 133

Multiple Choice

If an excise tax is placed on a product that has a perfectly inelastic demand, then:

• A) the entire tax will be paid by the consumer.
• B) the entire tax will be paid by the producer.
• C) the consumer and producer will each pay a share of the tax.
• D) the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply.

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Definitions:

Dihedral Angle

The angle between two planes defined by four atoms, often used to describe the orientation of parts of a molecule relative to each other.

Steric Strain

A form of strain in molecules resulting from repulsive interactions when atoms are forced too close to one another, influencing molecule stability and reactivity.

Torsion Strain

Internal strain in a molecule caused by the electron cloud repulsions when bonds are twisted away from their preferred angles.

Carbon-Carbon Bond

A chemical bond between two carbon atoms, which can vary in nature from single to triple bonds.