If a $1 Sales Tax Is Imposed on the Sale

question 268

Multiple Choice

If a $1 sales tax is imposed on the sale of a CD,and neither the demand nor the supply is perfectly elastic or perfectly inelastic,then the price of a CD paid by consumers will

• A) increase by $1 and fewer CDs will be bought.
• B) increase by less than $1 and fewer CDs will be bought.
• C) not change and the same number of CDs will be bought.
• D) increase by $1 and the same number of CDs will be bought.
• E) increase by more than $1 and fewer CDs will be bought.

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Definitions:

Profit Margins

A measure of profitability calculated as net income divided by revenue, indicating the percentage of each dollar of revenue that results in profit.

Financial Constraint

Limitations on the availability or use of financial resources, which can impact decision-making and strategy implementation.

Production Workers

Production workers are individuals involved in the manufacturing process, contributing to the creation of goods and products.

Base Pay

The initial rate of compensation an employee receives, not including benefits, bonuses, raises, or other forms of supplementary pay.