If the absolute value of the tax elasticity of supply is 0.5, a tax increase of 10 percent will
A. Decrease output by 5 percent and increase tax revenues.
B. Increase output by 5 percent and decrease tax revenues.
C. Increase output by 20 percent and decrease tax revenues.
D. Decrease output by 5 percent and decrease tax revenues.
Answer: A
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The longer any price change lasts over time, the
A) more difficult it is to alter quantity demanded. B) the more quickly quantity demanded will return to its original level. C) the longer the short-run equilibrium will continue to be the short-run equilibrium. D) more quantity demanded will change.
A Blue Ribbon Committee has decided that acid rain should be reduced and is trying to determine the optimal level of reduction. There are benefits from reducing acid rain (more wildlife and forests, better health, etc.), but there are also costs. The committee estimates that the marginal benefit of each unit of reduction is $700 - 5R, where R is units of reduction, and the marginal cost is 2R. If the committee wants to maximize the net benefit from reducing acid rain, what is the optimal level of pollution reduction?
A. $200 B. $100 C. $20 D. $10
Suppose the domestic supply (QS) and demand (QD) for MP3 players in the United States is represented by the following set of equations:QS = -25 + 10PQD = 875 - 5PIf the United States can import MP3 players from the rest of the world at a per unit price of $50, how many MP3 players will be produced in the United States?
A. 925 B. 525 C. 625 D. 475
Under a market system, the people with information about buyers' desires, production technology and resources make the decisions.
Answer the following statement true (T) or false (F)