If the Demand for a Good Is Very Price-Elastic, Then

question 150

Multiple Choice

If the demand for a good is very price-elastic, then the imposition of a per-unit tax on that good will cause

• A)the buyers to bear a larger portion of the tax burden.
• B)the sellers to bear a larger portion of the tax burden.
• C)no one to bear any tax burden.
• D)the buyers and sellers to bear the tax burden evenly.
• E)no effect on the market for that good.

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Definitions:

Variable Cost

Costs that vary directly with the level of production or business activity, such as materials and labor used in production.

Fixed Cost

Costs that do not change with the level of output or sales, such as rent, salaries, and insurance premiums.

Sample Space

The set of all possible outcomes or results in a probability experiment.