Consumers Will Lose No Consumer Surplus Due to a Tax

question 15

Multiple Choice

Consumers will lose no consumer surplus due to a tax if demand in their market is perfectly elastic because

• A) consumers can effortlessly change their behavior in response to the tax.
• B) firms will decide not to pay the tax to the government.
• C) the government will decide to tax something else.
• D) the amount of the tax is relatively low.
• E) producers can effortlessly change their behavior in response to the tax.

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Definitions:

Independent Variable

A factor manipulated by the experimenter to investigate its effects on the dependent variable in a study.

Factorial Design

A design in which all levels of each independent variable are combined with all levels of the other independent variables. A factorial design allows investigation of the separate main effects and interactions of two or more independent variables.

Main Effect

The direct effect of an independent variable on a dependent variable.

Factorial Design

An experimental design approach that involves investigating the effects of two or more independent variables at multiple levels on a dependent variable.