What is the advantage of the government imposing an ad valorem tax over a specific tax when facing a monopoly?
What will be an ideal response?
When comparing an ad valorem tax to a specific tax which generates the same revenue, the ad valorem tax is less distortionary, resulting in a smaller DWL.
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The number of firms in a monopolistically competitive market will be smaller if
A) the market demand curve shifts rightward. B) the minimum efficient scale is lower. C) fixed costs are smaller. D) fixed costs are larger.
Discrimination is difficult to measure empirically because
a. it is hard to measure and control for differences in marginal productivity. b. data on racial and gender differences is rarely available. c. discrimination is practiced by very few employers. d. economists find no significant wages differentials due to gender or race.
Initially, demand-pull inflation will
What will be an ideal response?
Refer to the three demand curves for coffee. Which of the following would shift the demand for coffee from D1 to D3?
A. an increase in the number of buyers of coffee B. an expected decrease in the price of coffee in the future C. a decrease in the price of coffee D. an increase in income if coffee is a normal good