When a Tax on a Good Is Enacted

question 71

Multiple Choice

When a tax on a good is enacted,

• A)buyers and sellers share the burden of the tax regardless of whether the tax is levied on buyers or on sellers.
• B)buyers always bear the full burden of the tax.
• C)sellers always bear the full burden of the tax.
• D)sellers bear the full burden of the tax if the tax is levied on them;buyers bear the full burden of the tax if the tax is levied on them.

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Definitions:

Abilene Paradox

A situation where a group of people collectively decide on a course of action that is counter to the preferences of many or all of the individuals in the group because each member mistakenly believes their own preferences are counter to the group's.

Hot Desert

A biome characterized by high temperatures and very low precipitation, making it an extreme environment for plant and animal life.

Escalation Of Commitment

Refers to the phenomenon where individuals or organizations continue to invest time, money, or resources into a failing decision or project, due to the substantial investments already made, rather than abandon it.

Psychological Determinants

Factors of psychological origin that influence an individual's behaviors, attitudes, and perceptions.