When does the burden of a tax imposed on a good fall more heavily on sellers?
What will be an ideal response?
The tax burden falls more heavily on sellers if the supply curve is less elastic than the demand curve. This is because if supply is less elastic than demand, the fall in supply due to the imposition of the tax will be less than the fall in demand due to the tax.
You might also like to view...
The demand for a monopoly's output is p = 100 - Q. The firm's production function is Q = 2L. Which of the following is the firm's demand for labor?
A) w = 200 - 8L B) w = 200 - 4L C) w = 100 - L D) w = 2L
Over the past 80 years, real GDP has
a. decreased in more years than it has increased b. increased dramatically c. increased slowly d. increased moderately e. been stable
The amount of additional aggregate demand needed to achieve full employment after allowing for price level changes is
A. The inflationary GDP gap. B. The AD excess. C. The recessionary GDP gap. D. The AD shortfall.
The text mentions 10 sources of U.S. comparative advantage. Which of the following is not one of them?
A. A large stock of intellectual property rights B. Relatively open immigration laws C. Religious diversity D. Skills of the U.S. labor force