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Tijuana Phelix
on Dec 19, 2024

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If the demand for a product is perfectly elastic and supply is upsloping, a $1 excise tax per unit on suppliers will

A) not raise price at all.
B) raise price by less than $1.
C) raise price by more than $1.
D) raise price by $1.

Perfectly Elastic

A situation in economics where the quantity demanded or supplied responds infinitely to changes in price.

Excise Tax

A tax charged on specific goods and services, such as tobacco and alcohol, often implemented to discourage their use or raise government revenue.

Upsloping

Typically refers to a graph line that shows an increase in a variable as another variable increases; commonly used in economics to describe supply curves.

  • Familiarize oneself with the role that demand and supply price elasticity plays in establishing who bears the tax burden.
  • Analyze the influence of market elasticities on the efficiency loss and tax burden distribution.
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Leigh McintoshDec 23, 2024
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