7) Suppose the demand for CDs is elastic, but not perfectly elastic, and the supply is inelastic, but not perfectly inelastic. A tax on CDs is paid A) equally by buyers and sellers. B) mostly by sellers. C) mostly by buyers. D) by neither buyers nor sellers. E) totally by sellers.

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Patrina SchowalterLv2

5 Jun 2018

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Please explain/prove your answers. Are the following statements true or false?

A. A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

B. If the government places a $2 tax in the market, the seller bears $2 of the tax burden.

C. Buyers and sellers rarely share the burden of a tax equally.

D. When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

E. If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

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5. If the government decides to levy a small excise tax on the buyers la perfectly competitive market in which the demand is perfectly elastic and supply curve is positively sloped, then we can conclude that: (A) The buyers will bear all of the tax, and there will be some excess burden. (B) The sellers will bear all of the tax, and there will be some excess burden. TC) The tax burden will be shared. The buyers will bear more of the tax than sellers, and there will be some excess burden. (D) The tax burden will be shared. The sellers will bear more of the tax than buyers, and there will be some excess burden. (E) The buyers will bear all of the tax, and there will be no excess burden. (F) The sellers will bear all of the tax, and there will be no excess burden. (G) The tax burden will be shared. The buyers will bear more of the tax than sellers, and there will be no excess burden. (H) The tax burden will be shared. The sellers will bear more of the tax than buyers, and there will be no excess burden. (1) The buyers will bear all of the tax, and they will also bear the excess burden. (J) none of the above