APFIVE Tax Incidence With Elastic Demand
Assuming the demand for cigarettes is elastic, what is the effect of an excise tax imposed on sellers?
A
The after-tax-equilibrium-price paid by buyers rises less than tax amount as sellers cannot pass full incidence onto buyers due to elasticity.
B
After-tax equilibrium price paid by buyers rises exactly by tax amount as incidence of tax is evenly distributed regardless of elasticity.
C
Sellers absorb the entire cost, so after-tax equilibrium price for buyers remains unchanged while quantity sold stays the same.
D
Tax imposition has no significant effects since burden equally shared between buyers and sellers regardless of product elasticity.
Question Leaderboard
| Rank | |||||
|---|---|---|---|---|---|
| #1 | Louis.Liu28 | 1 | 1 | 0m 00s | 100 |
| #2 | rebekahnrp | 1 | 1 | 0m 06s | 94 |
| #3 | minty6741 | 1 | 1 | 0m 19s | 81 |
| #4 | prishaprishaprisha | 1 | 1 | 0m 22s | 78 |
| #5 | hackeraltacc2024 | 1 | 1 | 0m 29s | 71 |
| #6 | ganeshkolli780 | 2 | 4 | 2m 01s | 59 |
| #7 | kovidgupta08 | 1 | 2 | 0m 58s | 32 |
| #8 | Demeyl.28 | 1 | 1 | 1m 10s | 30 |
| #9 | hyehak0401 | 1 | 2 | 1m 35s | -5 |
| #10 | shloktanna2010 | 1 | 1 | 2m 32s | -52 |
Items per page:
10
1 – 10 of 14