If demand were perfectly elastic, there would be no excess burden.
Answer the following statement true (T) or false (F)
False
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When the free market produces less than the socially optimal quantity of a good,
a. negative externalities must be present b. marginal social cost must exceed marginal private cost c. marginal private benefit must exceed marginal social benefit d. the government should tax production of the good e. there has been a market failure
When a firm has little ability to influence market prices it is said to be in
a. a thin market. b. a power market. c. a competitive market. d. a strategic market.
For any two goods, A and B, if MUA divided by PA equals 2.5 and MUB divided by PB equals 4.0, then with given income and prices the consumer should
A) buy more of good A and less of good B. B) buy more of good B and less of good A. C) buy all of good B and no A. D) stop because an equilibrium is achieved.
Refer to Figure 8.5. If the actual wage in this economy is represented by w2, employment in this economy is represented by
A) L1. B) L2. C) L3. D) 0.