If the demand for illegal drugs is inelastic, then a government policy to cause their price to increase would cause total revenue from drug sales to:
A. rise.
B. fall.
C. stay the same.
D. drop to zero.
Answer: A
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With a tax of $2,000 on $30,000 of income, and $2,000 on $70,000 of income, we can describe the structure of this tax as
A. progressive. B. marginal. C. regressive. D. proportional.
Suppose the marginal cost of producing a good falls so that the marginal social cost curve shifts downward. Then the efficient quantity to produce of that product
A) increases. B) does not change. C) decreases. D) could increase, stay the same, or decrease.
Equal increases in government spending and taxes will exactly offset each other, leaving the equilibrium level of output unchanged
Indicate whether the statement is true or false
Which of the following policies is a supply-side policy?
A. higher taxes B. increase in regulation C. increase in resource prices D. subsidies to produce technological advances