Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1). If the incidence of the tax is such that the producers of X pay $1.90 of the tax and the
consumers pay $.10, we can conclude that the:
A. supply of X is highly inelastic.
B. supply of X is highly elastic.
C. demand for X is highly inelastic.
D. demand for X is highly elastic.
Answer: D
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All of the following are true regarding managerial diseconomies except which one?
A) Managerial diseconomies are a cost associated with vertical integration. B) An increase in the required expertise of managers is a type of managerial diseconomy. C) Managerial diseconomies incentivize vertical integration. D) Increased complexity of the firm is a type of managerial diseconomy.
Specialization can occur because
A) governments pass laws that require it. B) varying skills differentiate workers. C) absolute advantage creates specialization among laborers. D) managers and laborers share job tasks.
People who focus on the "competitiveness" of the United States are
A) focusing on the right thing if the United States is to stay a leading economic power. B) treating the United States as if it is a business firm. C) also focusing on the importance of education. D) correctly recognizing that trade is a zero-sum game.
Which of the following does not influence the position of the long-run aggregate supply curve?
a. The quantity of raw materials available for production b. The quantity of capital used in production c. The quality of the labor force d. The actual price level e. The size of the labor force