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.