The Burden of a Tax Is Mainly Borne by the Buyer

question 116

Multiple Choice

The burden of a tax is mainly borne by the buyer if:

• A)the supply of the good is perfectly price elastic.
• B)if the supply of the good is relatively price elastic.
• C)if the demand for the good is relatively price elastic.
• D)if the demand for the good is relatively price inelastic.
• E)if the demand for the good is perfectly price elastic.

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Definitions:

Mortgage Payable

A long-term liability account that records the amount owed on a property mortgage.

Current Assets

Items on a company's balance sheet anticipated to be cashed in, sold off, or utilized within the longer span of either one year or its operational cycle.

Current Liabilities

Obligations or debts that a company expects to settle within one year or within the normal operating cycle of the business.

Liquidity

The ease with which an asset, or security, can be converted into ready cash without affecting its market price.