Which of the Following Statements Is TRUE? a Tax and Subsidy

question 123

Multiple Choice

Which of the following statements is TRUE? A tax and subsidy are similar in that:
I. they both create a deadweight loss.
II. the burden of the tax and benefit of the subsidy depend on relative elasticities of demand and supply.
III. they both change the equilibrium level of output.

• A) I only
• B) I and II only
• C) I, II, and III
• D) I and III only

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Definitions:

Data

factual information or measurements collected for analysis, reference, or reasoning, used in making decisions or determining conclusions.

THC

Tetrahydrocannabinol, the psychoactive compound found in cannabis plants that is responsible for most of marijuana's psychological effects.

Hashish

A drug made from the resin of the cannabis plant, known for its psychoactive effects.

Mescaline

A hallucinogenic compound derived from certain cacti, used traditionally in Native American spiritual practices and modern psychopharmacology.