Suppose the local government places a sales tax on hotel rooms and that the demand for these rooms is elastic while the supply is perfectly inelastic. The tax incidence is such that the tax will be paid by
A) only the consumers.
B) equally by the consumers and the producers.
C) only the producers.
D) the taxpayers.
C
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Over the last twenty years, real GDP in the U.S. economy has increased and there has been inflation. This indicates that
A) aggregate demand has been constant while aggregate supply has increased. B) aggregate demand has increased more than aggregate supply. C) aggregate demand has increased while aggregate supply has been constant. D) aggregate demand has increased less than aggregate supply.
The incidence of sales tax is determined by the
A) level of government (for example, local, state, or federal) which imposes the tax. B) federal government in all cases. C) greed of the sellers. D) price elasticities of supply and demand.
Declining real GDP for two quarters in a row is often called a recession
Indicate whether the statement is true or false
If a perfectly competitive industry is in long-run equilibrium, firms maximize profits, and the process of entry and exit results in
A. all firms producing where P = MC = AC. B. a left shift in the industry supply curve. C. a few firms earning economic profits. D. the price falling to the point where MR > MC.