When a Tax Is Imposed on a Good for Which

question 14

Multiple Choice

When a tax is imposed on a good for which the supply is relatively elastic and the demand 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)both equilibrium price and quantity will increase.

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Definitions:

Heuristics

Mental shortcuts or rules of thumb that simplify decision making.

Prime Numbers

Natural numbers greater than 1 that have no positive divisors other than 1 and themselves, crucial in number theory.

Algorithm

A step-by-step procedure or set of rules designed to perform a specific task or solve a particular problem.

Algorithm

A set of rules or steps designed to solve a problem or perform a task, often used in computing and mathematics.