JAMB - Economics (1978 - No. 17)
Which of the following statements is true?
A proportional tax is one which takes from high income people a larger fraction of their income than it takes for low income people
taxes on commodities of services which can be shifted elsewhere are usually called direct taxes
The sole proprietor is a legal entity
the influence of demand on price will be smallest on the short run
the cost of production is the most important determining factor of supply in the long run
Explanation
In the short run, demand is likely to be more inelastic (low = less than 1). If people are used to buying a good, then when the price goes up, they will tend to keep buying it out of habit.
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