Suppose Sellers of Liquor Are Required to Send $5

question 180

Multiple Choice

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell.Further,suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle.Which of the following statements is correct?

• A)This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor.
• B)The effective price received by sellers is $5.00 per bottle less than it was before the tax.
• C)Forty percent of the burden of the tax falls on buyers.
• D)All of the above are correct.

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Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period, typically reflected as a percentage increase in real GDP.

Doubling Inputs

When the quantities of all inputs used in the production process are increased by the same proportion.

Foreign Direct Investment

is an investment made by a firm or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets.

Foreign Portfolio Investment

Investment in financial assets from another country, such as stocks or bonds, without direct control over the businesses.