The incidence of a tax:
A. falls entirely on consumers if supply is perfectly inelastic.
B. falls entirely on consumers if demand is perfectly elastic.
C. is shared by suppliers and consumers if demand is perfectly elastic.
D. falls entirely on suppliers if demand is perfectly elastic.
D. falls entirely on suppliers if demand is perfectly elastic.
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If a $1 million open market purchase by the Fed generates a new deposit at a bank that immediately causes the bank's reserves held at the Fed to increase by $1 million, then the T-account effects are that the bank's assets and liabilities ________ by
$1 million and that the Fed's assets and liabilities ________ by $1 million. A) increase; decline B) decline; decline C) increase; increase D) decline; increase
All of the following represent returns to savers EXCEPT:
A) dividends on stocks B) fees on loans C) interest on deposits D) coupon payments on bonds
If it is employing the rule of reason when considering an antitrust case, the court
a. considers why the offending practice was adopted and its effect on competition b. does not consider why the offending practice was adopted or its effect on competition c. ignores the economic rationale for the offending practice and its consequences d. needs only determine that the offending practice took place e. considers only whether the firm has market power, not whether it used that power unreasonably
Suppose that a government agency is trying to decide between two pollution reduction policy options. Under the permit option, 100 pollution permits would be sold, each allowing emission of one unit of pollution. Firms would be forced to shut down if they produced any units of pollution for which they did not hold a permit. Under the pollution tax option, firms would be taxed $250 for each unit of pollution emitted. The regulated firms all currently pollute and face varying costs of pollution reduction, though all face increasing marginal costs of pollution reduction. Because firms face increasing marginal costs to reduce pollution, the demand curve for pollution permits will be:
A. perfectly elastic. B. perfectly inelastic. C. downward sloping. D. upward sloping.