Suppose the Demand Curve for a Product Is Horizontal and the Supply

question 257

Multiple Choice

Suppose the demand curve for a product is horizontal and the supply curve is upward sloping. If a unit tax is imposed in the market for this product,

• A) sellers bear the entire burden of the tax.
• B) the tax burden will be shared among the government, buyers and sellers.
• C) buyers bear the entire burden of the tax.
• D) the tax burden will be shared by buyers and sellers.

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Definitions:

Market Price

The present value at which a service or asset is available for purchase or sale.

Disclosure

A process where a company provides important financial information to its shareholders and the public, enhancing transparency.

Neutrality

In financial reporting, the principle that information must be unbiased and free from influence or manipulation.

Top Executives

Individuals holding senior management positions within a company, responsible for overseeing its operations and strategic direction.