The federal government, in order to fund expanded health care, imposes a lump-sum tax on all business property. Profit-maximizing firms that stay in business will respond by
A. raising prices to pay the tax.
B. cutting output to reduce costs.
C. lowering prices to stimulate demand.
D. doing nothing.
Answer: D
You might also like to view...
If the demand for money increases and the Fed wants interest rates to remain unchanged, which of the following would be appropriate policy?
A. Recall Federal Reserve notes from circulation. B. Buy bonds in the open market. C. Raise the discount rate. D. Raise the legal reserve requirement.
Economic analysis is used
A) only in economics classrooms. B) only by business people. C) only by policy makers. D) in all decision making.
The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution)
a. 68.26% b. 2.28% c. 34% d. 15.87% e. none of the above
In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the
equilibrium quantity (Q) of X. Refer to the given information. If X is an inferior good, a decrease in income will: A. decrease D, decrease P, and decrease Q. B. decrease D, decrease P, and increase Q. C. increase S, decrease P, and increase Q. D. increase D, increase P, and increase Q.