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Question
If a tax is imposed on a good with a perfectly inelastic supply, the burden of the tax will be borne
a. by both consumers and producers equally.
b. by consumers alone.
c. by producers alone.
d. mostly by consumers but partially by producers.
e. mostly by producers but partially by consumers.
Answer
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The economic entity most likely to engage in price gouging is
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Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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