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
The correct answer is: D
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.