The supply of new cars is perfectly elastic. A $400 per car tax is levied on buyers. As a result of the tax,
A) the price received by sellers will fall by $400.
B) the price paid by buyers, including the tax, will increase by $400.
C) the quantity of cars sold per year will be unchanged.
D) the excess burden of the tax will be zero.
E) both c and d
Correct Answer:
Verified
Q3: A lump-sum tax:
A)distorts market prices so that
Q11: A lump-sum tax results in both income
Q13: A lump-sum tax can distort prices and
Q14: If the compensated elasticity of supply of
Q19: Assuming that the income effects are negligible
Q22: The market supply of labor is perfectly
Q24: Most studies show that the price elasticity
Q26: If a lump-sum tax is imposed, the
Q30: Differential tax incidence measures the effect:
A)that a
Q31: Most studies of tax incidence assume that
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