How does the elasticity of supply influence the incidence of a tax, the quantity bought, the tax revenue, and the deadweight loss?
What will be an ideal response?
The more elastic the supply for a given demand the larger the increase in the price paid by the buyers and the smaller the decrease in the price received by the sellers, which means that the incidence on buyers is larger. Additionally, the more elastic the supply, the smaller the quantity bought so the smaller the tax revenue and the larger the deadweight loss.
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Which of the following is part of the cost of income transfers?
A) Tax-collecting agencies cost money to administer. B) Taxing incomes encourages people to work harder. C) Income transfers make the results more unfair. D) Income transfers increase the size of the economic pie. E) Income transfers are a similar to allocating resources using a lottery.
Which combination of fiscal policy actions would be most stimulative for an economy in a deep recession?
a. Increase taxes and government spending b. Decrease taxes and government spending c. Decrease taxes and increase government spending d. Increase taxes and decrease government spending
Recall the Application about the supply of shipping services to answer the following question(s).Recall the Application. As the price per ton of cargo drops low enough that it does not cover the AVC of smaller inefficient ships, then the smaller, more inefficient ships will decide to:
A. shut-down. B. raise the price they charge. C. make up for it by raising their speeds. D. make up for it by accepting more cargo.
If the Fed tries to lower the unemployment rate so it is lower than the natural unemployment rate, in the long run the SRPC ________ and the LRPC ________
A) shifts downward; shifts leftward B) does not change; shifts rightward C) shifts upward; does not change D) shifts downward; does not change E) does not change; does not change