Question 1
The imposition of an excise tax usually causes the price paid by consumers to ________, while the price received by sellers ________.
◦ fall; remains unchanged
◦ rise; falls
◦ rise; remains unchanged
◦ fall; falls
◦ rise; rises
Question 2
Consumers will bear a larger burden of an excise tax if
◦ both demand and supply are relatively inelastic.
◦ demand is relatively elastic and supply is relatively inelastic.
◦ both demand and supply are relatively elastic.
◦ demand is relatively inelastic and supply is relatively elastic.
◦ the tax is collected by firms rather than remitted directly to the government by consumers.