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 consumers of X pay $1.85 of the tax and the
producers pay $0.15, 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: C
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Two firms make most of the consumer alkaline batteries in the country: Duracell and Energizer. The market for batteries is most likely
A) a monopoly. B) an oligopoly. C) perfectly competitive. D) monopolistically competitive.
The structural deficit does not depend on the state of the economy.
Answer the following statement true (T) or false (F)
According to the efficient markets hypothesis, which of the following would increase the price of stock in the Simpson Corporation?
a. Simpson announces, just as everyone had expected, that it has hired a new highly respected CEO. b. Simpson announces that its profits were low, but not as low as the market had expected. c. Analysis by a column in a business weekly indicates that Simpson is overvalued. d. All of the above would increase the price.
All of the following are assumptions of the production possibilities curve EXCEPT
A) resources are fully employed. B) there is a fixed time period. C) there is a fixed level of technology. D) there is a fixed demand for the products.