When a Tax Is Imposed on a Good for Which

question 3

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 incur most of the burden of the tax.
• B)​sellers of the good will incur most of the burden of the tax.
• C)​buyers and sellers will each incur 50 percent of the burden of the tax.
• D)​the equilibrium quantity will increase.

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Definitions:

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