If the Supply Curve Is More Inelastic Than the Demand

question 127

Multiple Choice

If the supply curve is more inelastic than the demand curve,then:

• A) the sellers will bear a greater tax incidence than the buyers.
• B) the sellers will bear a smaller tax incidence than the buyers.
• C) the sellers will bear an equal tax incidence as the buyers.
• D) Any of these could be true.

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Definitions:

Rebate

A return of part of the original payment for some service or merchandise, serving as a discount or reduction.

Total Revenues

The overall amount of money generated by a business or economic entity from its activities.

Car Dealership

A business establishment that sells new or used cars at the retail level, typically based on a dealership contract with an automaker.

Elasticity of Demand

A measure of how the quantity demanded of a good or service changes in response to a change in its price.