Which of the following statements is true?
a. The demand for tobacco products tends to be elastic.
b. Total revenue is maximized when price elasticity of demand is one.
c. Goods are said to be price inelastic when the elasticity is greater than two.
d. The demand for milk is more elastic than the demand for luxury travel cruises.
e. The demand for 5-cent candy is more elastic than the demand for Irish lace tablecloths.
B
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A candidate in the 1992 presidential election argued that our current federal income-tax system should be replaced with a flat-tax. That is, every individual should pay the same percentage of income in federal taxes regardless of his or her income
Evaluate the merits of this policy. In your answer, be sure to include a discussion of both the equity and efficiency considerations of such a tax proposal.
Most of world trade is in the form of manufactured consumer goods such as TVs, stereos, VCRs, and running shoes
Indicate whether the statement is true or false
When a firm creates negative externalities by polluting, in order to achieve the socially efficient outcome: a. the firm's production should be prohibited
b. the firm's production should be increased and the price of its output should be decreased. c. the firm's production should be increased and the price of its output should be increased. d. the firm's production should be reduced and the price of its output should be increased.
The rate at which someone can swap money for a good is called the _____ of the good.
A. price B. opportunity cost C. total cost D. rate of substitution