If the Demand Curve Is Downward-Sloping and Supply Is Perfectly

question 272

Multiple Choice

If the demand curve is downward-sloping and supply is perfectly elastic,then the burden of an excise tax is:

• A)borne entirely by consumers.
• B)borne entirely by producers.
• C)shared by consumers and producers,with the burden falling mainly on consumers.
• D)shared by consumers and producers,with the burden falling mainly on producers.

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Definitions:

Transfer Payments

Payments made by the government to individuals or organizations without requiring the recipient to provide goods or services in return, such as welfare or subsidies.

Property Income

Earnings from property ownership, including rent, dividends, and interest.

Gini Coefficient

A commonly used measure of the degree of inequality of income derived from a Lorenz curve. It can range from 0 to a maximum of 1.

Lorenz Curve

A graphical representation of the distribution of income or wealth within a society, showcasing the degree of inequality.