CFA Institute · Level I

Demand &
Supply.

Topic 03 · Lesson 03.01 · Economics
Module 01 · Microfoundations — full-depth coverage
Môn
Econ
Module
01
Lesson
03.01
Thời lượng
150 min
D/S · Elasticity · TR · Surplus/DWL · Tax incidence
PART
01
Microfoundations
Today's lesson · 4 blocks

Full depth on
demand, supply & elasticity.

  • A · Law of Demand & Supply — functions + shifters
  • B · Equilibrium — concept, example, shift dynamics
  • C · Elasticity — PED, IED, CPE, midpoint, determinants
  • D · Applications — TR test, Surplus/DWL, Tax incidence, SR/LR
  • E · Practice — 4 CFA-exam style questions
Econ · 03.01 03 / 33
Concept · Block A

Law of Demand.

Khi giá cao → cầu thấp. Đường cầu dốc xuống — ceteris paribus (giữ các yếu tố khác không đổi). Dưới điều này là 2 effects cơ bản của microeconomics.

  1. Substitution effect — thay thế tương đối Khi giá A tăng relative to B, consumer switch từ A sang B. Magnitude phụ thuộc availability của close substitutes. Coke → Pepsi switch là trivial; insulin không có substitute → substitution effect ≈ 0.
  2. Income effect — sức mua thực Giá A tăng → real income (purchasing power) giảm → consumer cut consumption across the board, không chỉ A. Effect mạnh với hàng chiếm % lớn trong ngân sách (housing, food) và yếu với hàng chiếm % nhỏ.
  3. Exceptions — Giffen & Veblen goods Giffen: hàng thiết yếu (bánh mì cho người nghèo), giá tăng → income effect DOMINATES substitution → Q tăng. Veblen: luxury/status goods (Hermès), giá cao → prestige → Q tăng. Cả hai violate law of demand — rare nhưng exam hay hỏi để test understanding.
CFA Level I ECON · 03.01 — LAW OF DEMAND
Econ · 03.01 04 / 33
Demand · formula

The demand function.

§ Linear demand (commonly used on exam)
Qd = a − b · P
a = intercept (max demand at P=0) · b = |slope| > 0. Inverse form: P = (a − Qd)/b.
§ General multi-variable form
Qd = f(P, I, Ps, Pc, T, E, N)
I income · Ps substitute · Pc complement · T tastes · E expectations · N number of buyers.

§ Movement vs Shift — Chỉ P thay đổi → movement along curve. Bất kỳ biến khác (I, Ps, etc.) đổi → shift cả curve. Đây là phân biệt phổ biến trên đề — trap hay test student về "cause of change".

CFA Level I ECON · 03.01 — DEMAND FUNC
Econ · 03.01 05 / 33
Concept + formula

Law of Supply.

Khi giá cao → cung nhiều. Producer được incentivized khi margin tăng. Supply curve dốc lên — reflects increasing marginal cost to scale up.

§ Linear supply function
Qs = c + d · P
c thường âm (intercept phản ánh minimum price cần có để start production) · d > 0 reflect law of supply. Slope của supply cho biết responsiveness.
  1. 5 supply shifters — causes shift of the curve (1) Input costs ↓ → supply right. (2) Technology ↑ → supply right. (3) Taxes ↑ → supply left. (4) Number of producers ↑ → supply right. (5) Price expectations — expect P↑ → withhold now, supply left.
  2. Short-run vs Long-run supply SR: capacity cố định, firms không thể entry/exit nhanh → supply ít elastic. LR: firms entry/exit + scale capacity → supply elastic hơn. Market adjustments happen in waves: SR → LR.
CFA Level I ECON · 03.01 — SUPPLY
Econ · 03.01 06 / 33
Market equilibrium · Block B

Where D meets S.

Equilibrium price P* là điểm Qd = Qs. Thị trường tự reach đây qua price adjustment.

Surplus — P > P*
Điều kiện
Qs > Qd (excess supply)
Quan sát
Inventory builds, empty buyers
Phản ứng
Sellers cut price để clear
Government
Price floor (min wage) → persistent surplus
Shortage — P < P*
Điều kiện
Qd > Qs (excess demand)
Quan sát
Queues, rationing, black market
Phản ứng
Buyers bid up, sellers raise P
Government
Price ceiling (rent control) → persistent shortage

§ Free market tendency là toward equilibrium. Any government price control away from P* creates deadweight loss — welfare cost.

CFA Level I ECON · 03.01 — EQUILIBRIUM
Econ · 03.01 07 / 33
Equilibrium · example

Worked example.

§ Scenario Qd = 100 − 2P · Qs = −20 + 4P. Tìm P* và Q*. Tính surplus/shortage nếu P = $25 hoặc $15.
§ Step 1 — Set Qd = Qs
100 − 2P = −20 + 4P → 120 = 6P → P* = 20
Q* = 100 − 2(20) = 60 (verify Qs = −20 + 80 = 60 ✓)
§ Step 2 — Off-equilibrium
P = $25 → Qd = 50, Qs = 80 → surplus 30
P = $15 → Qd = 70, Qs = 40 → shortage 30
CFA Level I ECON · 03.01 — EQUILIBRIUM EX
Econ · 03.01 08 / 33
Elasticity · Block C

How sensitive is quantity?

3 loại elasticity (PED, IED, CPE). Tất cả unit-free — tỷ số của % thay đổi, comparable across goods/markets. 5 yếu tố quyết định PED của một good.

PED
Price Elasticity of Demand
%ΔQd / %ΔP. Luôn âm. |PED|>1 elastic, <1 inelastic, =1 unit-elastic. Đa số exam questions xoay quanh PED.
IED
Income Elasticity
%ΔQd / %ΔI. IED > 0 normal; < 0 inferior. 0 < IED < 1 necessity; > 1 luxury.
CPE
Cross-Price Elasticity
%ΔQA / %ΔPB. > 0 substitutes; < 0 complements; ≈ 0 unrelated.
§
5 determinants of PED
(1) Availability of substitutes (more subst → more elastic), (2) Share of income (larger share → more elastic), (3) Necessity vs luxury (necessity → inelastic), (4) Time horizon (longer → more elastic), (5) Market definition (narrow → elastic, broad → inelastic).
CFA Level I ECON · 03.01 — ELASTICITY CONCEPT
Econ · 03.01 09 / 33
Elasticity · formulas

The equations.

§ PED — 2 methods
Simple: PED = (ΔQ/Q1) / (ΔP/P1)
Midpoint/arc: PED = [ΔQ / avg(Q)] / [ΔP / avg(P)]
Midpoint chính xác hơn cho large changes; kết quả giống nhau bất kể hướng thay đổi. CFA dùng cả 2 — đọc đề để chọn method đúng.
§ IED & CPE
IED = (%ΔQd) / (%ΔI) · CPEA,B = (%ΔQA) / (%ΔPB)
Dấu của IED/CPE quan trọng hơn magnitude cho classification. Đừng bỏ dấu khi report.
CFA Level I ECON · 03.01 — ELASTICITY FORMULAS
Econ · 03.01 10 / 33
Elasticity · example

Worked example.

§ Scenario Giá cà phê $4 → $5. Quantity 100 → 85 ly/ngày. Tính PED với cả 2 methods.
§ Method 1 — Simple
%ΔQ = −15/100 = −15% · %ΔP = 1/4 = +25%
PED = −15/+25 = −0.60 → |PED| < 1 → inelastic
§ Method 2 — Midpoint
%ΔQ = −15/92.5 ≈ −16.22% · %ΔP = 1/4.5 ≈ +22.22%
PED ≈ −0.73 (cùng kết luận inelastic, magnitude khác một chút)
CFA Level I ECON · 03.01 — ELASTICITY EX
Econ · 03.01 11 / 33
Application · Block D

Elasticity & Total Revenue.

Pricing decision phụ thuộc PED. TR = P × Q — khi P↑, Q↓, net effect lên TR phụ thuộc magnitude của |PED|.

Elastic — |PED| > 1
P ↑
Q giảm % lớn hơn → TR ↓
P ↓
Q tăng % lớn hơn → TR ↑
Strategy
Lower prices để grow revenue
Examples
Budget airlines, luxury, dining out
Inelastic — |PED| < 1
P ↑
Q giảm % nhỏ hơn → TR ↑
P ↓
Q tăng % nhỏ hơn → TR ↓
Strategy
Raise prices để grow revenue
Examples
Gas, cigarettes, prescription drugs, staples

§ Real applications — OPEC exploit inelastic oil demand (cut production → P↑ → TR↑). Luxury brands use Veblen effect (high price = prestige, demand doesn't drop proportionally). Discount retailers target elastic categories (clothing, electronics) — low margins, high volume.

CFA Level I ECON · 03.01 — TR TEST
Econ · 03.01 12 / 33
Welfare economics

Consumer & Producer Surplus.

Welfare analysis đo "giá trị" mà market tạo ra cho consumers và producers. Competitive equilibrium maximizes total surplus.

CS
Consumer Surplus
Khoảng chênh giữa willingness to pay (max consumer chấp nhận) và actual price. Triangle area dưới demand curve + trên price line.
PS
Producer Surplus
Khoảng chênh giữa price received và minimum willing to sell (marginal cost). Triangle area trên supply curve + dưới price line.
TS
Total Surplus = CS + PS
Maximum tại competitive equilibrium P*. Any deviation (tax, ceiling, floor, monopoly) reduces TS.
DWL
Deadweight Loss
Loss in TS when market deviates from competitive equilibrium. Measures efficiency cost của intervention/distortion.

§ Sources of DWL — (1) Taxes (tạo wedge giữa P consumers pay và P producers receive). (2) Price ceilings below P* (shortage). (3) Price floors above P* (surplus). (4) Monopoly pricing (restrict Q, charge high P). (5) Trade barriers (tariffs, quotas). Exam hay hỏi DWL magnitude depends on elasticity.

CFA Level I ECON · 03.01 — SURPLUS & DWL
Econ · 03.01 13 / 33
Tax incidence

Who bears the tax?

Tax burden KHÔNG phụ thuộc ai được government charge — mà phụ thuộc elasticity tương đối của demand và supply. Inelastic side bears more.

§ Tax incidence formula
Consumer burden share = PES / (PES + |PED|)
Producer burden share = |PED| / (PES + |PED|)
PES = price elasticity of supply. Cả 2 share cộng lại = 1 (100% of tax is distributed). Side với lower |elasticity| bears MORE burden.
  1. Demand inelastic + supply elastic → consumer bears most Vì consumers không thể escape tax bằng cách cutting consumption (không có substitute). Gas, cigarettes, prescription drugs — consumers bear 70-90% của tax.
  2. Demand elastic + supply inelastic → producer bears most Vì consumer easily switch away → producer phải absorb tax để keep sales. Fresh produce, low-margin competitive products.
  3. Both elastic → large DWL, less tax revenue Quantity drops mạnh → government thu ít revenue, welfare loss lớn. Đây là lý do "sin taxes" (alcohol, tobacco) hiệu quả — demand inelastic, DWL nhỏ, revenue cao.
CFA Level I ECON · 03.01 — TAX INCIDENCE
Econ · 03.01 14 / 33
Time horizon matters

Short-run vs Long-run elasticity.

Elasticity tăng theo time horizon. Một good có thể inelastic trong 3 tháng nhưng elastic trong 3 năm. Chính điều này giải thích tại sao shock ngắn hạn khác dài hạn.

Short-run — inelastic
Consumer
Locked into habits, contracts, equipment
Producer
Capacity fixed, capital sunk
Substitution
Limited — chưa có time để tìm alternatives
Example
Oil demand: giá gấp đôi, consumption chỉ giảm 10% trong 6 tháng (vẫn lái xe cũ)
Long-run — more elastic
Consumer
Can adjust habits, switch products, relocate
Producer
Can scale capacity, entry/exit market
Substitution
Full — substitutes developed, capital replaced
Example
Oil demand: 5 năm sau giá cao → buy EV, solar → consumption giảm 30-40%

§ Investment implication — SR supply shocks → large P swings (OPEC cuts). LR price changes → capital reallocation. Analyzing sector requires distinguishing SR từ LR dynamics.

CFA Level I ECON · 03.01 — SR vs LR
Econ · 03.01 15 / 33
Exam focus

Demand & Supply on the exam.

Weight
D/S + Elasticity chiếm ~25% câu Econ L1. Nền tảng cho Business Cycles, Monetary Policy, International Trade modules.
PED-TR rule muscle
Elastic + P↑ → TR↓. Inelastic + P↑ → TR↑. Phải instant recall trong 30 giây/câu.
Tax incidence signature
Inelastic side bears more. Formula: consumer% = PES/(PES+|PED|). Common CFA Q pattern.
Shift ambiguity traps
Cả D + S shift cùng hướng → 1 biến chắc, 1 ambiguous. Phải biết biến nào.

§ 5 common traps — (1) PED reciprocal (tính 1/PED thay vì PED), (2) Bỏ qua dấu IED/CPE (chỉ focus magnitude), (3) Giả định PED constant dọc linear demand (thực ra thay đổi), (4) Nhầm movement với shift, (5) SR và LR elasticity treated as equal.

CFA Level I ECON · 03.01 — EXAM FOCUS

Practice →

Lý thuyết xong · 4 câu hỏi CFA-exam difficulty
EN Original → Hint → Dịch đề → Đáp án
Econ · 03.01 17 / 33
Practice · Question 01 · Original

PED + Revenue test.

§ Vignette
A manufacturer raises its wholesale price from $40 to $44 per unit. Monthly unit sales fall from 2,500 to 2,200. Based on these data, the most accurate statement about price elasticity and the firm's total revenue (TR) is:
  1. ADemand is inelastic (|PED| ≈ 0.83); TR rose by $3,000 — the price increase was a profitable decision.
  2. BDemand is elastic (|PED| ≈ 1.20); TR fell by $3,200 — the price increase reduced revenue.
  3. CDemand is unit-elastic (|PED| = 1.00); TR is unchanged at $100,000.
CFA Level I ECON · 03.01 — Q1 ORIGINAL
Econ · 03.01 18 / 33
Hint · Question 01

4-step workflow.

§ Keywords P $40 → $44. Q 2,500 → 2,200. Tính PED, TR ở 2 points, link PED–TR rule.
  1. Step 1%ΔP = 4/40 = +10%. %ΔQ = −300/2500 = −12%.
  2. Step 2PED = −12/+10 = −1.20 → |PED| > 1 → elastic.
  3. Step 3TR₀ = 40×2500 = $100,000. TR₁ = 44×2200 = $96,800. ΔTR = −$3,200.
  4. Step 4Link — Elastic + P↑ → TR↓. Price decision backfired.
CFA Level I ECON · 03.01 — Q1 HINT
Econ · 03.01 19 / 33
Practice · Question 01 · Tiếng Việt

Dịch đề.

§ Vignette
Nhà sản xuất tăng wholesale price từ $40 lên $44/unit. Số units bán/tháng giảm từ 2,500 xuống 2,200. Statement chính xác nhất về price elasticity và total revenue của firm là:
  1. ADemand inelastic (|PED| ≈ 0.83); TR tăng $3,000 — price increase là quyết định có lợi.
  2. BDemand elastic (|PED| ≈ 1.20); TR giảm $3,200 — price increase làm giảm revenue.
  3. CDemand unit-elastic (|PED| = 1.00); TR không đổi, giữ ở $100,000.
CFA Level I ECON · 03.01 — Q1 VIỆT
Econ · 03.01 20 / 33
Answer · Question 01

Answer: B — Elastic, TR ↓ $3,200.

✓ Correct — B
PED = −12%/+10% = −1.20 → elastic. TR₀ = $100,000 → TR₁ = $96,800 → ΔTR = −$3,200. Consistent với PED-TR rule (elastic + P↑ → TR↓).
✗ Wrong — A
|PED| = 0.83 là reciprocal trap (1/1.20). Thường do chia nhầm tử/mẫu. Và TR giảm, không tăng.
✗ Wrong — C
Unit-elastic yêu cầu |%ΔQ| = |%ΔP|. Ở đây 12% ≠ 10% → không unit-elastic.
Key takeaway
PED-TR rule phải là instinct. Elastic + P↑ → TR↓. Option A trap có double-error (reciprocal PED + wrong TR direction) — đọc cẩn thận cả 2 parts.
CFA Level I ECON · 03.01 — ANSWER Q1
Econ · 03.01 21 / 33
Practice · Question 02 · Original

CPE + investment.

§ Vignette
Analyst Quan observes: (i) a 12% increase in the price of premium bottled water leads to a 4% decrease in its own quantity demanded; (ii) simultaneously, demand for home water filters rises 8%; and (iii) demand for premium sparkling water falls 2%. Which conclusion is most supported?
  1. APremium water is elastic (|PED| ≈ 3.0); home filters are complements (CPE < 0).
  2. BPremium water is inelastic (|PED| ≈ 0.33); filters are substitutes (CPE ≈ +0.67); sparkling water is a complement (CPE ≈ −0.17).
  3. CAll three products show inelastic demand and are in the same market segment.
CFA Level I ECON · 03.01 — Q2 ORIGINAL
Econ · 03.01 22 / 33
Hint · Question 02

Classify each relationship.

§ Keywords Premium water P +12%. Own Q −4%. Filters +8%. Sparkling −2%. Tính PED own + 2 CPEs.
  1. Step 1PED = −4/+12 = −0.33 → |PED| < 1 → inelastic.
  2. Step 2CPE(filters, water) = +8/+12 = +0.67 → positive → substitute.
  3. Step 3CPE(sparkling, water) = −2/+12 = −0.17 → negative → complement.
CFA Level I ECON · 03.01 — Q2 HINT
Econ · 03.01 23 / 33
Practice · Question 02 · Tiếng Việt

Dịch đề.

§ Vignette
Analyst Quan quan sát: (i) giá premium bottled water tăng 12% → own Q giảm 4%; (ii) demand cho home water filters tăng 8%; (iii) demand cho premium sparkling water giảm 2%. Kết luận nào được hỗ trợ nhất?
  1. APremium water elastic (|PED| ≈ 3.0); filters là complements (CPE < 0).
  2. BPremium water inelastic (|PED| ≈ 0.33); filters là substitutes (CPE ≈ +0.67); sparkling là complement (CPE ≈ −0.17).
  3. CCả 3 đều inelastic, cùng market segment.
CFA Level I ECON · 03.01 — Q2 VIỆT
Econ · 03.01 24 / 33
Answer · Question 02

Answer: B — 3 correct classifications.

✓ Correct — B
PED = −0.33 inelastic. CPE filters = +0.67 substitute. CPE sparkling = −0.17 complement. All 3 interpretations exact match with signs + magnitudes.
✗ Wrong — A
|PED| = 3.0 là reciprocal trap (12/4 thay vì 4/12). Filters có CPE > 0 (substitute), không complement. Double error.
✗ Wrong — C
Filters tăng 8% khi water đắt → KHÔNG phải inelastic behavior của filters. "Same market segment" là overreach — chỉ có elasticity data, không có info segment.
Key takeaway
Multi-product questions: tính từng elasticity riêng, verify sign (substitute/complement), tránh reciprocal trap.
CFA Level I ECON · 03.01 — ANSWER Q2
Econ · 03.01 25 / 33
Practice · Question 03 · Original

Supply shock + inelastic demand.

§ Vignette
A severe drought reduces domestic corn supply by 25% at every price level. The price elasticity of demand for corn = −0.4 (inelastic, as corn is a staple). Absent government intervention (no imports, no subsidies, no price controls), the expected changes in equilibrium P* and Q* are most consistent with:
  1. AP* rises significantly; Q* falls only modestly — price bears most of the adjustment.
  2. BP* rises modestly; Q* falls significantly — quantity bears most of the adjustment.
  3. CBoth P* and Q* fall proportionally as the market contracts.
CFA Level I ECON · 03.01 — Q3 ORIGINAL
Econ · 03.01 26 / 33
Hint · Question 03

Who absorbs the shock?

§ Keywords Drought reduces supply 25%. PED = −0.4 (inelastic). No intervention. Ai chịu adjustment — P hay Q?
  1. Hint 1PED = |%ΔQ|/|%ΔP| = 0.4. Nếu %ΔQ = 1%, %ΔP phải = 1/0.4 = 2.5%. Price adjust 2.5× more than quantity.
  2. Hint 2Logic: staple food không có substitute → consumer willing pay cao để maintain consumption. Supply shock → price spike.
  3. Hint 3Historical parallels: oil shock 1973, food shortages. Price gấp đôi, consumption chỉ giảm 10-15%.
CFA Level I ECON · 03.01 — Q3 HINT
Econ · 03.01 27 / 33
Practice · Question 03 · Tiếng Việt

Dịch đề.

§ Vignette
Đợt hạn hán nghiêm trọng làm giảm domestic corn supply 25% ở mọi mức giá. PED cho corn = −0.4 (inelastic, corn là staple food). Không có can thiệp chính phủ (không import, không subsidy, không price control), thay đổi dự kiến của P* và Q* phù hợp nhất với:
  1. AP* tăng mạnh; Q* giảm nhẹ — giá chịu phần lớn adjustment.
  2. BP* tăng nhẹ; Q* giảm mạnh — quantity chịu phần lớn adjustment.
  3. CCả P* và Q* đều giảm tỷ lệ khi thị trường co lại.
CFA Level I ECON · 03.01 — Q3 VIỆT
Econ · 03.01 28 / 33
Answer · Question 03

Answer: A — P ↑↑, Q ↓.

✓ Correct — A
Inelastic demand (|PED|=0.4) → consumer không respond mạnh với price. Supply shock 25% → price spike. Ratio: nếu Q giảm 1%, P tăng 2.5%. If Q giảm 10% → P tăng ~25%.
✗ Wrong — B
Pattern "Q ↓↓, P ↓" là của elastic demand (|PED|>1). Đề cho inelastic — logic ngược.
✗ Wrong — C
Cả P và Q giảm là impossible với supply shock — supply curve shift left luôn đẩy P lên (given downward demand). C ignores direction basics.
Key takeaway
Supply shock + inelastic demand = large P movement, small Q movement. Ratio ≈ 1/|PED|. Đây là lý do OPEC production cuts có impact lớn — oil SR demand inelastic.
CFA Level I ECON · 03.01 — ANSWER Q3
Econ · 03.01 29 / 33
Practice · Question 04 · Original

Tax incidence calculation.

§ Vignette
A government imposes a $5 per unit excise tax on sugar-sweetened beverages. Market research finds: Price Elasticity of Demand (PED) = −0.3 (highly inelastic, addictive nature); Price Elasticity of Supply (PES) = +1.8 (elastic, producers have flexibility). Approximately what percentage of the tax burden falls on consumers through higher prices?
  1. A14% — supply is elastic, so most burden shifts to producers.
  2. B86% — demand is inelastic, so consumers absorb most of the tax.
  3. C50% — government-imposed taxes are always split equally by statute.
CFA Level I ECON · 03.01 — Q4 ORIGINAL
Econ · 03.01 30 / 33
Hint · Question 04

Apply incidence formula.

§ Keywords Tax $5/unit. PED = −0.3. PES = +1.8. Tính consumer burden %.
  1. Step 1Công thức: Consumer share = PES / (PES + |PED|). Inelastic side bears more.
  2. Step 2Plug: Consumer share = 1.8 / (1.8 + 0.3) = 1.8 / 2.1 ≈ 0.857 → 85.7%.
  3. Step 3Sanity check: demand is MUCH more inelastic than supply → demand side bears most. 86% of $5 = $4.29 price increase to consumers. Producers absorb ~$0.71.
  4. Step 4Policy insight — "sugar taxes" regressive (hit low-income heavily) vì demand for staples/addictive products inelastic.
CFA Level I ECON · 03.01 — Q4 HINT
Econ · 03.01 31 / 33
Practice · Question 04 · Tiếng Việt

Dịch đề.

§ Vignette
Chính phủ áp thuế excise $5/unit trên nước ngọt có đường. Market research cho thấy: PED = −0.3 (rất inelastic, tính chất gây nghiện); PES = +1.8 (elastic, producers có flexibility). Bao nhiêu % burden của thuế rơi vào consumers qua giá cao hơn?
  1. A14% — supply elastic nên phần lớn burden shift sang producers.
  2. B86% — demand inelastic nên consumers absorb phần lớn thuế.
  3. C50% — thuế chính phủ luôn chia đều theo quy định pháp luật.
CFA Level I ECON · 03.01 — Q4 VIỆT
Econ · 03.01 32 / 33
Answer · Question 04

Answer: B — 86% on consumers.

✓ Correct — B
Formula: Consumer burden = PES / (PES + |PED|) = 1.8 / (1.8 + 0.3) = 85.7%. Demand more inelastic → consumers absorb most. Consumer pays ~$4.29, producer absorbs ~$0.71.
✗ Wrong — A
14% là producer burden (|PED|/(PES+|PED|) = 0.3/2.1). Wrong side của formula. Common trap — remember inelastic side bears more.
✗ Wrong — C
Tax incidence KHÔNG phụ thuộc pháp luật ("statutory incidence") — chỉ phụ thuộc elasticities ("economic incidence"). Government charge producer nhưng actual burden distribution do market determine.
Key takeaway
Tax incidence rule: inelastic side bears more. Consumer share = PES/(PES+|PED|). Sugar/cigarette/gas taxes regressive vì low-income spend larger % on inelastic staples.
CFA Level I ECON · 03.01 — ANSWER Q4

03.01 ✓

Tiếp theo · Lesson 03.02 — The Firm and Market Structures