Suppose that the federal government levies a 50 cent excise tax on gasoline and that the demand for gasoline is highly inelastic while the supply is highly elastic. Under these circumstances, the burden of the tax
a. will fall primarily on producers.
b. will fall primarily on consumers.
c. will be split equally between consumers and producers.
d. cannot be determined because the burden of a tax is not influenced by the elasticities of supply and demand.
B
Economics
You might also like to view...
How has growth in M2 minus the growth in real GDP compared to the inflation rate in the United States?
What will be an ideal response?
Economics
Suppose the government of a small open economy reduces its spending, so that national saving increases. The result is
A) an increase in the real interest rate. B) an increase in net exports. C) a decrease in the real interest rate. D) an increase in investment.
Economics