Deadweight loss is minimized when a tax is levied on something for which people:
A. are not likely to change their behavior much in response to a price change.
B. are very likely to change their behavior in response to a price change.
C. have a large income elasticity of demand.
D. have a small income elasticity of demand.
A. are not likely to change their behavior much in response to a price change.
You might also like to view...
Which of the following government actions is appropriate in a market with an external benefit?
A) taxes B) vouchers C) marketable permits D) setting a tax equal to the transactions costs E) price ceiling
Refer to Table 14-4. How are the firms in this advertising game caught in a prisoner's dilemma?
A) They are not in a prisoner's dilemma because there is one clear strategy for each. B) They would be more profitable if they refrained from advertising but each fears that if it does not advertise, it will lose customers. C) Only the first mover is caught in a prisoner's dilemma because the second has a chance to observe and respond. D) Since each firm is uncertain about the other's behavior, each will adopt a wait-and-see attitude which results in no increase in market share and no new customers.
Briefly define an endogenous variable and an exogenous variable. What variables are endogenous in the classical model? What variables are exogenous
What will be an ideal response?
Entrepreneurship results in an equal distribution of wealth and income
Indicate whether the statement is true or false