Only in the case of perfectly inelastic demand will consumers pay the full amount of a specific tax or ad valorem tax
Indicate whether the statement is true or false
False. While it is true that consumers pay the full tax in the case of perfectly inelastic demand, it is not the only case. Regardless of demand elasticity (except in the rare case where demand is also perfectly elastic), consumers will pay the full amount of the tax if supply is perfectly elastic.
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Suppose that the interest rate is greater than the equilibrium interest rate. Which of the following occurs?
I. There is an excess quantity of money. II. The quantity of money automatically increases. III. The interest rate falls. A) I B) I and II C) I and III D) I, II and III
The total cost of producing a given level of output is
A) maximized when a corner solution exists. B) minimized when the ratio of marginal product to input price is equal for all inputs. C) minimized when the marginal products of all inputs are equal. D) minimized when marginal product multiplied by input price is equal for all inputs.
Suppose you are the owner of a softball team and you are hiring laborers (players). Suppose also that not all players are equally talented, but that union rules require that they all receive the same salary. If you measure output by the number of runs scored in a season, your total variable cost curve will take what shape, and why?
a. U-shaped because softball teams like this one are no different from other businesses b. U-shaped because even though salaries are identical, some players are better and will score more runs c. increasing but at different rates because there are only so many times players can come to bat d. increasing but at different rates because even though salaries are identical, some players are better and will score more runs e. increasing at a constant rate because union rules require uniform salaries for players
Using a carefully-labeled graph, explain the concept of declining marginal rate of substitution. Why would we expect indifference curves to exhibit this characteristic?
What will be an ideal response?