A $200 Increase in the Size of a Tax on a a Good

question 236

Multiple Choice

A $2.00 increase in the size of a tax on a good will only cause the price for buyers to increase by $2.00 if

• A) demand is perfectly inelastic.
• B) demand is perfectly elastic.
• C) demand is unit elastic.
• D) demand is inelastic, but not perfectly inelastic.
• E) demand is elastic, but not perfectly elastic.

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Definitions:

Wrongfully Rejected

The unjustified refusal of acceptance of something, often referring to goods or services that should have been accepted under contractual terms.

Good Faith Purchaser

An individual who buys property without knowledge of any existing claims or defects against the title of the property.

Insolvent

Insolvent describes a state where an individual or organization cannot meet its financial obligations or pay its debts as they become due.

Negotiable Document

A legal document guaranteeing the payment of a specific amount of money, either on demand or at a set time, which can be transferred from one holder to another.