If the Elasticity of Demand for a Product Equals 3

question 66

Multiple Choice

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic,then if a tax is imposed on this product,

• A) the buyer pays all the tax.
• B) the seller pays all the tax.
• C) the buyer pays 3/4 of the tax.
• D) the seller pays 3/4 of the tax.
• E) the buyer pays 4/3 of the tax.

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Definitions:

Inventory

The total amount of goods and materials held by a company to support production, fulfill orders, and maintain service levels.