In a Market Where Supply and Demand Are Equally Elastic,producers

question 2

Multiple Choice

In a market where supply and demand are equally elastic,producers and consumers will share equally the burden of a tax because

• A) producers will simply raise the price of their output in response to the tax.
• B) consumers will buy less of the good in question once the tax is imposed.
• C) the tax is more likely to be paid out of pocket by producers.
• D) the government doesn't care who pays the tax as long as the revenue is collected.
• E) both have equal ability to change their behavior in response to the tax.

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Definitions:

Primary Obligation

The fundamental duty or liability that a party is required to fulfill under a contract.

Indemnity

A contractual agreement between parties where one agrees to compensate the other for any loss or damage incurred.

Guarantee

A formal pledge or assurance that certain conditions or obligations will be fulfilled, often serving as security in transactions.

Unwritten Lease

An oral or implied agreement between a landlord and tenant that has not been formalized in writing.