Price ceilings create shortages, but taxes do not.
Answer the following statement true (T) or false (F)
True
Taxes create a wedge between the price consumers pay and the price suppliers receive, but quantity demanded and quantity supplied are still equal.
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The above figure shows a firm in monopolistic competition. At the profit maximizing level of output
A) the firm is making a positive economic profit. B) the firm incurs an economic loss. C) the firm is making zero economic profit. D) this firm would choose to shut down in the short run.
Which of the following models focuses on how productivity shocks explain fluctuations in real GDP?
A) the monetarist model B) the new classical model C) the new Keynesian model D) the real business cycle model
Max has allocated $100 toward meats for his barbecue. His budget line and an indifference map are shown in the above figure. What is the price of chicken?
A) $0.80/lb B) $1.25/lb C) $4/lb D) $5/lb
You have $1 to spend on a vending machine snack. A bag of chips will cost you $1 and the candy bar will also cost you $1. If you choose the bag of chips, the opportunity cost of buying the chips is:
A) $1. B) $1 plus the enjoyment you would have received from the candy bar. C) the enjoyment you would have received from the candy bar. D) $2 minus the enjoyment you received from the bag of chips.