Who generally bears most of a sales tax when the demand for the good taxes is inelastic?
What will be an ideal response?
Answer: the consumer
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When a U.S. company makes a $200,000 donation to the International Red Cross to help the victims of an earthquake in India, the transaction is recorded in the
A) current account. B) one-way donations account. C) international help account. D) capital and financial account. E) official settlements account.
All possible gains from specialization and exchange would be fully exploited only under which market structure?
A) Pure monopoly B) Perfect competition C) Oligopoly D) Structures allowing for price-searching activity E) Structures where entry is restricted
Adverse selection in the market for health insurance arises because
A) buyers of insurance know more than insurance companies about the likelihood of an illness for which buyers want insurance. B) the federal government intervenes in insurance markets by controlling prices and reimbursement policies. C) many insurance companies care more about profits than they do about providing services for their customers in the event of illness. D) insurance companies are not allowed to charge premiums that are high enough to insure against "worst-case" illness.
A perfectly competitive firm is producing a good at a level where P = $30 and MC = $30. The firm will continue to produce in the short run as long as:
A. AVC is less than $30. B. AFC is less than $30. C. price does not increase. D. ATC is greater than $30.