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When a Tax Is Imposed on a Good for Which

Question 3

Multiple Choice

When a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic,


A) buyers of the good will bear most of the burden of the tax.
B) sellers of the good will bear most of the burden of the tax.
C) buyers and sellers will each bear 50 percent of the burden of the tax.
D) both equilibrium price and quantity will increase.

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