Suppose the elasticity of demand for Mexican food is 3.00 and the elasticity of supply is 1.20. If the government imposes a sales tax on Mexican food, which of the following occurs?
i. Less Mexican food is purchased by buyers.
ii. Less Mexican food is produced by sellers.
iii. The government receives the excess burden as revenue.
iv. Both the consumer surplus and the producer surplus decrease.
A) i and ii
B) iii only
C) i, ii, and iv
D) iv only
E) i, ii, iii, and iv
C
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Because education generates a positive externality, ______
A. everyone who wants a college education should get one B. graduates' marginal benefit exceeds the society's value of the educa-tion C. the quantity of education undertaken will achieve the social interest if it is free D. subsidies to colleges or vouchers to students are means of achieving the efficient number of graduates
If Martina's income increases and, as a result, she chooses to buy more lattés per month at each price, then her demand curve will
a. shift to the right. b. shift to the left. c. not shift; instead, Martina will move along her demand curve downward and to the right. d. not shift; instead, Martina will move along her demand curve upward and to the left.
Demand is more inelastic for luxury goods.
Answer the following statement true (T) or false (F)
The components of the expenditure approach to measuring Gross Domestic Product (GDP) include all of the following EXCEPT
A. nondurable consumer goods. B. durable consumer goods. C. government purchases of goods and services. D. government Social Security payments.