Week 6 Home Assinment

Question 1:

What does tax incidence refer to?

• A) The percentage of income paid in taxes

• B) The legal responsibility to pay the tax

• C) The distribution of the tax burden between buyers and sellers

• D) The rate at which tax is levied on goods and services

Question 2:

If the demand for a product is highly inelastic, who bears most of the tax burden?

• A) Sellers

• B) Buyers

• C) Government

• D) Equally shared between buyers and sellers

Question 3:

What happens to the tax burden when supply is more elastic than demand?

• A) Buyers bear more of the tax burden

• B) Sellers bear more of the tax burden

• C) The tax burden is equally shared

• D) The government absorbs the tax burden

Question 4:

If a tax is imposed on a product and the demand is perfectly elastic, who bears the tax burden?

• A) Buyers

• B) Sellers

• C) Government

• D) Equally shared between buyers and sellers

Question 5:

What effect does a tax have when the supply curve is perfectly inelastic?

• A) The tax burden falls entirely on the buyer

• B) The tax burden falls entirely on the seller

• C) The tax burden is shared equally between buyers and sellers

• D) The government absorbs the tax

Question 6:

Which of the following is true about a tax on a good with perfectly inelastic demand?

• A) Buyers bear the entire tax burden

• B) Sellers bear the entire tax burden

• C) The tax burden is shared equally

• D) The tax incidence depends on government policy

Question 7:

When a government imposes a tax on a good, the actual burden of the tax depends on:

• A) Who the tax is legally imposed on

• B) The relative elasticity of supply and demand

• C) The total amount of tax revenue generated

• D) The political influence of buyers or sellers

Question 8:

In the case of perfectly elastic supply, who will bear the entire tax burden?

• A) Sellers

• B) Buyers

• C) Both buyers and sellers equally

• D) The government

Question 9:

A tax that causes buyers to pay a higher price and sellers to receive a lower price results in:

• A) No change in tax incidence

• B) A deadweight loss

• C) An increase in the price of substitutes

• D) An equal tax burden for buyers and sellers

Question 10:

Which of the following factors most influences whether buyers or sellers bear the larger share of a tax burden?

• A) The size of the market

• B) The elasticity of supply and demand

• C) The level of government intervention

• D) The production cost of the good