x

Subject - Economics:

Microeconomics

MCQ - 120-4130

Question:

Good X is exchanged in a competitive market. Which of the following is true if an excise tax is now imposed on the production of good X?

  1. If the demand curve is perfectly elastic, the price rises by the amount of the tax.
  2. The consumer’s burden of the tax rises as the demand curve is more elastic.
  3. Consumer surplus rises as a result of the tax.
  4. The consumer’s burden of the tax rises as the demand curve is more elastic.
  5. If the demand curve is perfectly inelastic, the price does not rise as a result of the tax.

Correct Answer: D

Explanation:

If the demand curve is more inelastic (more vertical), a greater burden of an excise tax falls upon consumers and less upon producers.

Record Performance

269 MCQ for effective preparation of the test of Microeconomics of Economics section.

Read the MCQ statement: Good X is exchanged in a competitive market. Which of the following is true if an excise tax is now imposed on the production of good X? , keenly and apply the method you have learn through the video lessons for Microeconomics to give the answer. Record your answer and check its correct answer and video explanation for MCQ No. 120-4130.

How to Answer

Solve the question for MCQ No. and decide which option (A through D/E) is the best choice to answer the MCQ, then click/tap the blue button to view the correct answer and it explanation.

Share This Page