The burden of a tax falls entirely on buyers if ________
A) the price elasticity of demand is zero (perfectly inelastic)
B) the price elasticity of demand is greater than 1
C) the income elasticity of demand is high
D) the price elasticity of supply is unitary elastic
A
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Why is the study of asymmetric information associated with the market for "lemons"?
A) Potential buyers of used cars have difficulty separating good used cars from bad used cars; bad used cars are often referred to as "lemons." B) Because there is little advertising in the market for lemons, buyers have difficulty determining the quality of lemons before they are purchased. C) Sellers of citrus fruit — lemons, oranges, grapefruit — know the difference between bad fruit and good fruit; buyers do not have this information. D) Most sellers of used cars have less information about their cars than the dealers who buy them; used cars are often referred to as "lemons."
The money supply will grow even larger through deposit creation when
A. People decide to use cash instead of checks for transactions. B. Interest rates rise, causing people to move money out of banks and into bonds. C. Banks stop making new loans because they are too risky. D. Consumers, businesses, and government increasing their borrowing.
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $2 above the equilibrium price in this market. Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is
a. $2
b. $3
c. $4
d. $5
Ceteris paribus, which of the following will cause the supply of paper to decrease?
A.) The price of lumber, an ingredient in paper production, increases. B.) The federal government decides to subsidize the production of paper. C.) People rely more on electronic books and less on printed materials. D.) The technology used to produce paper improves.