Which of the following statements about excise taxes is TRUE?
A) The producer will increase the price of the good by the amount of the excise tax.
B) The equilibrium price will increase and the equilibrium quantity will remain unchanged.
C) Both the consumer and producer pay part of the excise tax.
D) Consumers will refuse to pay excise taxes forcing the producers to pay it.
Answer: C
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Aggregate planned expenditure decreases if
A) exports increase. B) government expenditure on goods and services increases. C) autonomous consumption increases. D) real GDP decreases. E) investment increases.
Refer to Figure 13-8. What is the firm's profit-maximizing price?
A) $12 B) $13 C) $14 D) $16
Simon owns a gas station, and a new tax has been passed on gasoline. How can he expect his customers to react to the tax over the short term?
a. They will quit buying gas and use an alternative fuel. b. They will buy more gas because it has an inelastic supply curve. c. They will buy slightly less gas because there is no substitute. d. They will buy considerably less gas because it has an inelastic demand curve.
Being penalized via taxes for making more money in dollars even though your purchasing power hasn't changed at all is called:
A. shoe-leather costs. B. menu costs. C. the velocity of inflation. D. tax distortion.