When a Tax Is Imposed on a Good for Which

question 29

Multiple Choice

When a tax is imposed on a good for which the demand is relatively elastic and the supply is relatively inelastic,

• A)buyers of the good will bear most of the burden of the tax.
• B)sellers of the good will bear most of the burden of the tax.
• C)buyers and sellers will each bear 50 percent of the burden of the tax.
• D)the effective price paid by buyers will decrease as a result of the tax.

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Definitions:

Comparative Reasoning

A method of reasoning by which one compares similarities and differences among objects, concepts, or scenarios.

Notoriously Weak

A description for something known widely and unfavorably for lacking strength, efficiency or quality.

Logical Perspective

An approach or point of view that is based on clear, reasoned thinking and evidence.

Assert Comparisons

Making statements that establish similarities or differences between two or more items.