Economics questions

| August 14, 2017

51. When
a tax is placed on the buyers of lemonade,

a.

the sellers
bear the entire burden of the tax.

b.

the buyers
bear the entire burden of the tax.

c.

the burden of
the tax will be always be equally divided between the buyers and the sellers.

d.

the burden of
the tax will be shared by the buyers and the sellers, but the division of the
burden is not always equal.

52. If
a tax is levied on the buyers of sugar, then

a.

buyers will
bear the entire burden of the tax.

b.

sellers will
bear the entire burden of the tax.

c.

buyers and
sellers will share the burden of the tax.

d.

the
government will bear the entire burden of the tax.

53. If
the government passes a law requiring buyers of motorcycles to send $500 to the
government for every motorcycle they buy, then

a.

the demand
curve for motorcycles shifts downward by $500.

b.

buyers of
motorcycles pay $500 more per motorcycle than they were paying before the
tax.

c.

sellers of motorcycles
are unaffected by the tax.

d.

All of the
above are correct.

54. Suppose
buyers of liquor are required to send $1.00 to the government for every bottle
of liquor they buy. Further, suppose
this tax causes the effective price received by sellers of liquor to fall by
$0.80 per bottle. Which of the following
statements is correct?

a.

This tax
causes the demand curve for liquor to shift downward by $1.00 at each
quantity of liquor.

b.

The price
paid by buyers is $0.20 per bottle more than it was before the tax.

c.

Eighty
percent of the burden of the tax falls on sellers.

d.

All of the
above are correct.

55. Suppose
buyers of liquor are required to send $1.00 to the government for every bottle
of liquor they buy. Further, suppose
this tax causes the effective price received by sellers of liquor to fall by
$0.60 per bottle. Which of the following
statements is correct?

a.

This tax
causes the supply curve for liquor to shift upward by $1.00 at each quantity
of liquor.

b.

The price
paid by buyers is $0.40 per bottle more than it was before the tax.

c.

Sixty percent
of the burden of the tax falls on buyers.

d.

All of the
above are correct.

56. Suppose
there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay
the tax to the government. If the tax is
reduced from $50 per ticket to $30 per ticket, then

a.

the demand
curve will shift upward by $20, and the price paid by buyers will decrease by
less than $20.

b.

the demand
curve will shift upward by $20, and the price paid by buyers will decrease by
$20.

c.

the supply
curve will shift downward by $20, and the effective price received by sellers
will increase by less than $20.

d.

the supply
curve will shift downward by $20, and the effective price received by sellers
will increase by $20.

57. Suppose
there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay
the tax to the government. If the tax is
reduced from $50 per ticket to $30 per ticket, then

a.

the demand
curve will shift upward by $20, and the effective price received by sellers
will increase by $20.

b.

the demand
curve will shift upward by $20, and the effective price received by sellers
will increase by less than $20.

c.

the supply
curve will shift downward by $20, and the price paid by buyers will decrease
by $20.

d.

the supply
curve will shift downward by $20, and the price paid by buyers will decrease
by less than $20.

58. When
a tax is levied on buyers of tea,

a.

buyers of tea
and sellers of tea both are made worse off.

b.

buyers of tea
are made worse off and the well-being of sellers is unaffected.

c.

buyers of tea
are made worse off and sellers of tea are made better off.

d.

the
well-being of both buyers of tea and sellers of tea is unaffected.

59. Which
of the following statements is correct concerning the burden of a tax imposed
on candles?

a.

Buyers bear
the entire burden of the tax.

b.

Sellers bear
the entire burden of the tax.

c.

Buyers and
sellers share the burden of the tax.

d.

We have to
know whether it is the buyers or the sellers that are required to pay the tax
to the government in order to make this determination.

60. Which
of the following is not correct?

a.

Taxes levied
on sellers and taxes levied on buyers are not equivalent.

b.

A tax places
a wedge between the price that buyers pay and the price that sellers receive.

c.

The wedge
between the buyers’ price and the sellers’ price is the same, regardless of
whether the tax is levied on buyers or sellers.

d.

In the new
after-tax equilibrium, buyers and sellers share the burden of the tax.

61. If
the government removes a tax on sellers of a good and imposes the same tax on
buyers of the good, then the price paid by buyers will

a.

increase and
the price received by sellers will increase.

b.

increase and
the price received by sellers will not change.

c.

not change
and the price received by sellers will increase.

d.

not change
and the price received by sellers will not change.

62. If
the government removes a tax on buyers of a good and imposes the same tax on
sellers of the good, then the price paid by buyers will

a.

not change
and the price received by sellers will not change.

b.

not change
and the price received by sellers will decrease.

c.

decrease and
the price received by sellers will not change.

d.

decrease and
the price received by sellers will decrease.

63. In
the final analysis, tax incidence

a.

depends on
the legislated burden.

b.

is entirely
random.

c.

depends on
the forces of supply and demand.

d.

falls
entirely on buyers or entirely on sellers.

64. If
the government removes a tax on a good, then the quantity of the good sold will

a.

increase.

b.

decrease.

c.

not change.

d.

All of the
above are possible.

65. If
the government removes a tax on a good, then the price paid by buyers will

a.

increase and
the price received by sellers will increase.

b.

increase and
the price received by sellers will decrease.

c.

decrease and
the price received by sellers will increase.

d.

decrease and
the price received by sellers will decrease.

66. Which
of the following causes a shortage of a good?

a.

a binding
price floor

b.

a binding
price ceiling

c.

a tax on the
good

d.

More than one
of the above is correct.

67. Which
of the following causes a surplus of a good?

a.

a binding
price floor

b.

a binding
price ceiling

c.

a tax on the
good

d.

More than one
of the above is correct.

68. Which
of the following causes the price paid by buyers to be different than the price
received by sellers?

a.

a binding
price floor

b.

a binding
price ceiling

c.

a tax on the
good

d.

More than one
of the above is correct.

69. The
price paid by buyers in a market will increase if the government

a.

increases a
binding price floor in that market.

b.

increases a
binding price ceiling in that market.

c.

decreases a
tax on the good sold in that market.

d.

More than one
of the above is correct.

floors

70. The
price paid by buyers in a market will increase if the government

a.

decreases a
binding price floor in that market.

b.

increases a
binding price ceiling in that market.

c.

decreases a
tax on the good sold in that market.

d.

imposes a
binding price ceiling in that market.

71. The
price paid by buyers in a market will decrease if the government

a.

increases a
binding price floor in that market.

b.

increases a
binding price ceiling in that market.

c.

decreases a
tax on the good sold in that market.

d.

More than one
of the above is correct.

72. The
price paid by buyers in a market will decrease if the government

a.

imposes a
binding price floor in that market.

b.

increases a
binding price ceiling in that market.

c.

increases a
tax on the good sold in that market.

d.

decreases a
binding price floor in that market.

73. The
price received by sellers in a market will increase if the government

a.

decreases a
binding price floor in that market.

b.

decreases a
binding price ceiling in that market.

c.

decreases a
tax on the good sold in that market.

d.

None of the
above is correct.

74. The
price received by sellers in a market will increase if the government

a.

decreases a
binding price floor in that market.

b.

increases a
binding price ceiling in that market.

c.

increases a
tax on the good sold in that market.

d.

imposes a
binding price ceiling in that market.

75. The
price received by sellers in a market will decrease if the government

a.

increases a
binding price floor in that market.

b.

increases a
binding price ceiling in that market.

c.

decreases a
tax on the good sold in that market.

d.

None of the
above is correct.

76. The
price received by sellers in a market will decrease if the government

a.

imposes a
binding price floor in that market.

b.

decreases a
binding price ceiling in that market.

c.

decreases a
tax on the good sold in that market.

d.

increases a
binding price floor in that market.

77. The
quantity sold in a market will increase if the government

a.

decreases a
binding price floor in that market.

b.

decreases a
binding price ceiling in that market.

c.

increases a
tax on the good sold in that market.

d.

More than one
of the above is correct.

78. The
quantity sold in a market will increase if the government

a.

decreases a
binding price floor in that market.

b.

increases a
binding price ceiling in that market.

c.

decreases a
tax on the good sold in that market.

d.

More than one
of the above is correct.

79. The
quantity sold in a market will decrease if the government

a.

decreases a
binding price floor in that market.

b.

decreases a
binding price ceiling in that market.

c.

decreases a
tax on the good sold in that market.

d.

More than one
of the above is correct.

80. The
quantity sold in a market will decrease if the government

a.

decreases a
binding price floor in that market.

b.

increases a
binding price ceiling in that market.

c.

increases a
tax on the good sold in that market.

d.

More than one
of the above is correct.

Figure
6-9

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81. Refer
to Figure 6-9. The equilibrium price
in the market before the tax is imposed is

a.

$1.

b.

$2.

c.

$5.

d.

$6.

82. Refer
to Figure 6-9. As the figure is
drawn, who sends the tax payment to the government?

a.

the buyers

b.

the sellers

c.

A portion of
the tax payment is sent by the buyers and the remaining portion is sent by
the sellers.

d.

The question
of who sends the tax payment cannot be determined from the figure.

83. Refer
to Figure 6-9. The price that buyers
pay after the tax is imposed is

a.

$5.

b.

$6.

c.

$7.

d.

$8.

84. Refer
to Figure 6-9. The effective price
that sellers receive after the tax is imposed is

a.

$5.

b.

$6.

c.

$7.

d.

$8.

85. Refer
to Figure 6-9. The amount of the tax
per unit is

a.

$1.

b.

$1.50.

c.

$2.

d.

$3.

86. Refer
to Figure 6-9. The burden of the tax
on buyers is

a.

$1 per unit.

b.

$1.50 per
unit.

c.

$2 per unit.

d.

$3 per unit.

87. Refer
to Figure 6-9. The burden of the tax
on sellers is

a.

$1 per unit.

b.

$1.50 per
unit.

c.

$2 per unit.

d.

$3 per unit.

88. Refer
to Figure 6-9. Suppose the same
supply and demand curves apply and a tax of the same amount per unit as shown
here is imposed. Now, however, the
sellers of the good, rather than the buyers, are required to pay the tax to the
government. Now, relative to the case
depicted in the figure,

a.

the burden on
buyers will be larger and the burden on sellers will be smaller.

b.

the burden on
buyers will be smaller and the burden on sellers will be larger.

c.

the burden on
buyers will be the same and the burden on sellers will be the same.

d.

The relative
burdens in the two cases cannot be determined without further information.

89. Refer
to Figure 6-9. How much tax revenue
does this tax generate for the government?

a.

$150

b.

$180

c.

$250

d.

$300

Figure
6-10

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90. Refer
to Figure 6-10. The price paid by
buyers after the tax is imposed is

a.

$8.

b.

$10.

c.

$14.

d.

$18.

91. Refer
to Figure 6-10. The effective price
received by sellers after the tax is imposed is

a.

$8.

b.

$10.

c.

$14.

d.

$18.

92. Refer
to Figure 6-10. The amount of the
tax per unit is

a.

$4.

b.

$5.

c.

$6.

d.

$10.

93. Refer
to Figure 6-10. The per-unit burden
of the tax is

a.

$4 on buyers
and $6 on sellers.

b.

$5 on buyers
and $5 on sellers.

c.

$6 on buyers
and $4 on sellers.

d.

$10 on buyers
and $0 on sellers.

94. Refer
to Figure 6-10. How much tax revenue
does this tax produce for the government?

a.

$480

b.

$600

c.

$800

d.

$1120

Figure
6-11

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95. Refer
to Figure 6-11. The equilibrium
price in the market before the tax is imposed is

a.

$3.50.

b.

$5.

c.

$6.

d.

$7.

96. Refer
to Figure 6-11. As the figure is
drawn, who sends the tax payment to the government?

a.

the buyers

b.

the sellers

c.

A portion of
the tax payment is sent by the buyers and the remaining portion is sent by
the sellers.

d.

The question
of who sends the tax payment cannot be determined from the figure.

97. Refer
to Figure 6-11. The price paid by
buyers after the tax is imposed is

a.

$2.50.

b.

$3.50.

c.

$5.00.

d.

$6.00.

98. Refer
to Figure 6-11. The effective price
sellers receive after the tax is imposed is

a.

$2.50.

b.

$3.50.

c.

$5.00.

d.

$6.00.

99. Refer
to Figure 6-11. The amount of the
tax per unit is

a.

$1.

b.

$1.50.

c.

$2.50.

d.

$3.50.

100.Refer
to Figure 6-11. Buyers pay how much
of the tax per unit?

a.

$1.

b.

$1.50.

c.

$2.50.

d.

$3.50.

101.Refer
to Figure 6-11. Sellers pay how much
of the tax per unit?

a.

$1.00.

b.

$1.50.

c.

$2.50.

d.

$3.50.

102.Refer
to Figure 6-11. Suppose the same
supply and demand curves apply and a tax of the same amount per unit as shown
here is imposed. Now, however, the
buyers of the good, rather than the sellers, are required to pay the tax to the
government. Now, relative to the case
depicted in the figure,

a.

the burden on
buyers will be larger and the burden on sellers will be smaller.

b.

the burden on
buyers will be smaller and the burden on sellers will be larger.

c.

the burden on
buyers will be the same and the burden on sellers will be the same.

d.

The relative
burdens in the two cases cannot be determined without further information.

103.Refer
to Figure 6-11. How much tax revenue
does this tax generate for the government?

a.

$75

b.

$125

c.

$175

d.

$300

Figure
6-12

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104.Refer
to Figure 6-12. The price paid by
buyers after the tax is imposed is

a.

$3.

b.

$4.

c.

$5.

d.

$7.

105.Refer
to Figure 6-12. The effective price
received by sellers after the tax is imposed is

a.

$3.

b.

$4.

c.

$5.

d.

$7.

106.Refer
to Figure 6-12. For every unit of
the good that is sold,

a.

sellers are
required to send one dollar to the government and buyers are required to send
two dollars to the government.

b.

sellers are required
to send two dollars to the government and buyers are required to send one
dollar to the government.

c.

sellers are
required to send three dollars to the government and buyers are required to
send nothing to the government.

d.

sellers are
required to send nothing to the government and buyers are required to send
two dollars to the government.

107.Refer
to Figure 6-12. Which of the
following is correct?

a.

One-fourth of
the burden of the tax falls on buyers and three-fourths of the burden of the
tax falls on sellers.

b.

One-third of
the burden of the tax falls on buyers and two-thirds of the burden of the tax
falls on sellers.

c.

One-half of
the burden of the tax falls on buyers and one-half of the burden of the tax
falls on sellers.

d.

Two-thirds of
the burden of the tax falls on buyers and one-third of the burden of the tax
falls on sellers.

108.Refer
to Figure 6-12. How much tax revenue
does this tax produce for the government?

a.

$24

b.

$30

c.

$32

d.

$56

Figure
6-13

The vertical
distance between points A and B represents the tax in the market.

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109.Refer
to Figure 6-13. The price that
buyers pay after the tax is imposed is

a.

$8.

b.

$10.

c.

$16.

d.

$24.

110.Refer
to Figure 6-13. The effective price
that sellers receive after the tax is imposed is

a.

$6.

b.

$10.

c.

$16.

d.

$24.

111.Refer
to Figure 6-13. The amount of the
tax per unit is

a.

$6.

b.

$8.

c.

$14.

d.

$18.

112.Refer
to Figure 6-13. The per-unit burden
of the tax on buyers is

a.

$6.

b.

$8.

c.

$14.

d.

$24.

113.Refer
to Figure 6-13. The per-unit burden
of the tax on sellers is

a.

$6.

b.

$8.

c.

$10.

d.

$14.

Figure
6-14

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114.Refer
to Figure 6-14. Suppose a tax of $2
per unit is imposed on this market. What
will be the new equilibrium quantity in this market?

a.

less than 50
units

b.

50 units

c.

between 50
units and 100 units

d.

greater than
100 units

115.Refer
to Figure 6-14. Suppose a tax of $2
per unit is imposed on this market. How
much will sellers receive per unit after the tax is imposed?

a.

$3

b.

between $3
and $5

c.

between $5
and $7

d.

$7

116.Refer
to Figure 6-14. Suppose a tax of $2
per unit is imposed on this market. How
much will buyers pay per unit after the tax is imposed?

a.

$3

b.

between $3
and $5

c.

between $5
and $7

d.

$7

117.Refer
to Figure 6-14. Suppose a tax of $2
per unit is imposed on this market.
Which of the following is correct?

a.

One-fourth of
the burden of the tax will fall on buyers and three-fourths of the burden of
the tax will fall on sellers.

b.

One-third of
the burden of the tax will fall on buyers and two-thirds of the burden of the
tax will fall on sellers.

c.

One-half of
the burden of the tax will fall on buyers and one-half of the burden of the
tax will fall on sellers.

d.

Two-thirds of
the burden of the tax will fall on buyers and one-third of the burden of the
tax will fall on sellers.

Figure
6-15

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118.Refer
to Figure 6-15. Suppose a tax of $5
per unit is imposed on this market. What
will be the new equilibrium quantity in this market?

a.

less than 25
units

b.

25 units

c.

between 25
units and 50 units

d.

greater than
50 units

119.Refer
to Figure 6-15. Suppose a tax of $5
per unit is imposed on this market. How
much will sellers receive per unit after the tax is imposed?

a.

$5

b.

between $5
and $10

c.

between $10
and $14

d.

$14

120.Refer
to Figure 6-15. Suppose a tax of $5
per unit is imposed on this market. How
much will buyers pay per unit after the tax is imposed?

a.

$5

b.

between $5
and $10

c.

between $10
and $14

d.

$14

121.Refer
to Figure 6-15. Suppose a tax of $5
per unit is imposed on this market.
Which of the following is correct?

a.

Buyers and
sellers will share the burden of the tax equally.

b.

Buyers will
bear more of the burden of the tax than sellers will.

c.

Sellers will
bear more of the burden of the tax than buyers will.

d.

Any of the
above is possible.

122.The
federal government uses the revenue from the FICA (Federal Insurance
Contribution Act) tax to pay for

a.

unemployment
compensation.

b.

the salaries
of members of Congress.

c.

Social
Security and Medicare.

d.

housing
subsidies for low-income people.

123.The
Federal Insurance Contribution Act (FICA) tax is an example of

a.

a payroll
tax.

b.

a sales tax.

c.

a farm
subsidy.

d.

an income
subsidy.

124.A
payroll tax is a

a.

fixed number
of dollars that every firm must pay to the government for each worker that
the firm hires.

b.

tax that each
firm must pay to the government before the firm can hire workers and operate
its business.

c.

tax on the
wages that firms pay their workers.

d.

tax on all
wages above the minimum wage.

125.Congress
intended that

a.

the entire
FICA tax be paid by workers.

b.

the entire
FICA tax be paid by firms.

c.

one-quarter
of the FICA tax be paid by workers, and three-quarters be paid by firms.

d.

half the FICA
tax be paid by workers, and half be paid by firms.

126.Although
lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

a.

the actual
tax incidence is unaffected by the legislated tax incidence.

b.

the employer
now is required by law to pay more than 50 percent of the tax.

c.

the employee
now is required by law to pay more than 50 percent of the tax.

d.

employers are
no longer required by law to pay any portion of the tax.

127.When
a payroll tax is enacted,

a.

the wage
received by workers falls and the wage paid by firms rises.

b.

the wage
received by workers falls and the wage paid by firms falls.

c.

the wage
received by workers rises and the wage paid by firms falls.

d.

the wage
received by workers rises and the wage paid by firms rises.

128.A
key lesson from the payroll tax is that the

a.

tax is a tax
solely on workers.

b.

tax is a tax
solely on firms that hire workers.

c.

tax
eliminates any wedge that might exist between the wage that firms pay and the
wage that workers receive.

d.

true burden
of a tax cannot be legislated.

129.Suppose
that in a particular market, the supply curve is highly elastic and the demand
curve is highly inelastic. If a tax is
imposed in this market, then

a.

the buyers
will bear a greater burden of the tax than the sellers.

b.

the sellers
will bear a greater burden of the tax than the buyers.

c.

the buyers
and sellers are likely to share the burden of the tax equally.

d.

the buyers
and sellers will not share the burden equally, but it is impossible to
determine who will bear the greater burden of the tax without more
information.

130.If
a tax is imposed on a market with inelastic demand and elastic supply, then

a.

buyers will
bear most of the burden of the tax.

b.

sellers will
bear most of the burden of the tax.

c.

the burden of
the tax will be shared equally between buyers and sellers.

d.

it is
impossible to determine how the burden of the tax will be shared.

131.Suppose
that the demand for picture frames is inelastic and the supply of picture
frames is elastic. A tax of $1 per frame
levied on picture frames will increase the price paid by buyers of picture
frames by

a.

less than
$0.50.

b.

$0.50.

c.

between $0.50
and $1.

d.

$1.

132.Suppose
that the demand for picture frames is inelastic and the supply of picture
frames is elastic. A tax of $1 per frame
levied on picture frames will decrease the effective price received by sellers
of picture frames by

a.

less than
$0.50.

b.

$0.50.

c.

between $0.50
and $1.

d.

$1.

133.In
which of these cases will the tax burden fall most heavily on buyers of the
good?

a.

The demand
curve is relatively steep and the supply curve is relatively flat.

b.

The demand
curve is relatively flat and the supply curve is relatively steep.

c.

The demand
curve and the supply curve are both relatively flat.

d.

The demand
curve and the supply curve are both relatively steep.

134.Buyers
of a good bear the larger share of the tax burden when a tax is placed on a
product for which

a.

the supply is
more elastic than the demand.

b.

the demand in
more elastic than the supply.

c.

the tax is
placed on the sellers of the product.

d.

the tax is
placed on the buyers of the product.

135.Suppose
that a tax is placed on books. If the
buyers pay the majority of the tax, then we know that the

a.

demand is
more inelastic than the supply.

b.

supply is
more inelastic than the demand.

c.

government
has required that buyers remit the tax payments.

d.

government
has required that sellers remit the tax payments.

136.Suppose
that in a particular market, the demand curve is highly elastic and the supply
curve is highly inelastic. If a tax is
imposed in this market, then

a.

the buyers
will bear a greater burden of the tax than the sellers.

b.

the sellers
will bear a greater burden of the tax than the buyers.

c.

the buyers
and sellers are likely to share the burden of the tax equally.

d.

the buyers
and sellers will not share the burden equally, but it is impossible to
determine who will bear the greater burden of the tax without more
information.

137.If
a tax is imposed on a market with inelastic supply and elastic demand, then

a.

buyers will
bear most of the burden of the tax.

b.

sellers will
bear most of the burden of the tax.

c.

the burden of
the tax will be shared equally between buyers and sellers.

d.

it is
impossible to determine how the burden of the tax will be shared.

138.Suppose
that the demand for picture frames is elastic and the supply of picture frames
is inelastic. A tax of $1 per frame
levied on picture frames will increase the price paid by buyers of picture
frames by

a.

less than
$0.50.

b.

$0.50.

c.

between $0.50
and $1.

d.

$1.

139.Suppose
that the demand for picture frames is elastic and the supply of picture frames
is inelastic. A tax of $1 per frame
levied on picture frames will decrease the effective price received by sellers
of picture frames by

a.

less than
$0.50.

b.

$0.50.

c.

between $0.50
and $1.

d.

$1.

140.In
which of these cases will the tax burden fall most heavily on sellers of the
good?

a.

The demand
curve is relatively steep and the supply curve is relatively flat.

b.

The demand
curve is relatively flat and the supply curve is relatively steep.

c.

The demand
curve and the supply curve are both relatively flat.

d.

The demand
curve and the supply curve are both relatively steep.

141.Sellers
of a good bear the larger share of the tax burden when a tax is placed on a
product for which

a.

the supply is
more elastic than the demand.

b.

the demand in
more elastic than the supply.

c.

the tax is
placed on the sellers of the product.

d.

the tax is
placed on the buyers of the product.

142.Suppose
that a tax is placed on books. If the
sellers pay the majority of the tax, then we know that the

a.

demand is
more inelastic than the supply.

b.

supply is
more inelastic than the demand.

c.

government
has required that buyers remit the tax payments.

d.

government
has required that sellers remit the tax payments.

143.The
demand for salt is inelastic and the supply of salt is elastic. The demand for caviar is elastic and the
supply of caviar is inelastic. Suppose
that a tax of $1 per pound is levied on the sellers of salt and a tax of $1 per
pound is levied on the buyers of caviar.
We would expect th

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