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Housing Construction Is Generally Believed to Be an Industry of Constant

Question 17

Multiple Choice

Housing construction is generally believed to be an industry of constant costs.In the long run, which of the following is true if a $10 per square foot tax on housing construction is collected directly from builders?


A) The incidence of the tax will be borne by builders.
B) The excess burden of the tax will be zero.
C) The quantity of new construction supplied will be unaffected.
D) The tax will be fully shifted to buyers of new construction.

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