When a tax is imposed on a good for which both demand and supply are very elastic,
a. sellers effectively pay the majority of the tax
b. buyers effectively pay the majority of the tax.
c. the tax burden is equally divided between buyers and sellers.
d. None of the above is correct; further information would be required to determine how the burden of the tax is distributed between buyers and sellers.
d
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Whatever else you learned about profit-maximization, you should have learned this: Maximum profit is obtained at the production level where
a. P = AC b. TR = TC c. MR = AR d. MR = MC e. TR = MR
Suppose the cost of medical care rose 200 percent from 1990 to 2010, and average prices for the economy rose 150 percent. Relative to others, people who purchased medical care experienced a:
A. Lower real income as a result of the price effect. B. Higher real income as a result of the price effect. C. Lower real income as a result of the wealth effect. D. Higher real income as a result of the wealth effect.
An expansionary fiscal policy is likely to
A) increase borrowing by the Treasury through the sale of bonds. B) decrease borrowing by the Treasury through the purchase of bonds. C) increase borrowing by the Treasury through the purchase of bonds. D) decrease borrowing by the Treasury through the sale of bonds.
Which of the following is not an example of bartering?
A. Mary paying for her new shoes with her credit card. B. Mrs. Smith treating the neighbor children to pizza after they helped clean up her yard. C. John cutting his neighbor's grass in return for his neighbor washing John's car. D. Sue trading candles with Tom for his bread.