In the short run, specific taxes on a firm result in
a. price increases that may not persist in the long run.
b. an increase in consumer surplus because the tax permits spending in additional government services.
c. shortages of the good being taxed.
d. an increase in producer surplus because of the rise in price.
a
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What is the difference between economic and accounting profit? Why is a distinction between them important?
The prediction that workers get additional training only when the rewards from the training are expected to exceed the costs of the training (including the opportunity costs) is based on the:
A. cost-benefit principle. B. scarcity principle. C. principle of diminishing returns to capital. D. principle of comparative advantage.
Which of the following characterizes a competitive market?
A. A downward-sloping demand curve for the firm. B. Some of the firms sell at a price above the market equilibrium price. C. A vertical demand curve facing each firm in the market. D. A downward-sloping demand curve for the market.
Which of the following represents a long-run adjustment?
A. A farmer uses an extra dose of fertilizer on his corn crop. B. Unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants. C. A steel manufacturer cuts back on its purchases of coke and iron ore. D. A supermarket hires four additional clerks.