Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 19, Problem 3.1P
To determine
Identify the role of the taxes on necessities.
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How a tax burden is divided between consumers and producers is called tax incidence. Consumers bear most of the tax burden when:
Group of answer choices
Demand is more elastic than supply
The firm decides to pass none of the tax on to the consumer via a higher price.
Supply is more elastic than demand.
Cross elasticity of demand is .35
When supply and demand are equally elastic:
producers carry the majority of the tax burden.
consumers carry the majority of the tax burden.
producers and consumers carry an equal amount of the tax burden.
consumers carry all of the tax burden.
Why does taxation create an excess burden?
Chapter 19 Solutions
Principles of Economics (12th Edition)
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