If an excise tax is placed on a product that has a perfectly inelastic demand, then:
A. the entire tax will be paid by the consumer.
B. the entire tax will be paid by the producer.
C. the consumer and producer will each pay a share of the tax.
D. the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply.
Answer: A
You might also like to view...
A popular dinner among college students today is sushi, green tea, and wasabi dip so these foods are complements. If the price of green tea increases and the price of wasabi dip increases, what would be the effect on demand for sushi at lunch?
A) The demand for sushi would decrease. B) The demand for sushi would increase. C) The demand for sushi would be unaffected, but the price would increase. D) The demand for sushi would be unaffected, but the price would decrease. E) The demand for sushi could increase or decrease.
The Fed uses a "core" price index, one that excludes food and energy prices to measure inflation. It does so because
A) food and energy prices have wide swings that are not related to the causes of general inflation. B) food and energy have inelastic demand curves and consumers will buy them regardless of their price. C) food and energy prices do not change all that much during the short run, so are irrelevant to the calculation of inflation. D) it wants to avoid the blame for high gasoline prices causing inflation.
From which of the following countries does the U.S. import the largest dollar value of goods?
a. Canada b. Mexico c. Great Britain d. Japan
Which of the following shifts aggregate demand to the left?
a. an increase in the price level. b. households decide to save a larger fraction of their income. c. an increase in net exports. d. Congress passes a new investment tax credit.