The government is deciding where to put a $1 tax-either in a market with elastic supply and demand curves, or a market with inelastic supply and demand curves. If their aim is to raise the most revenue with the smallest deadweight loss, where should the tax be placed?
A. In the market with elastic supply and demand curves
B. In the market with inelastic supply and demand curves
C. It is impossible to say without more information
D. Since the burden is shared, it doesn't matter in which market it is placed
B. In the market with inelastic supply and demand curves
You might also like to view...
If the cross elasticity of demand for good A with respect to good B is +2.7, then good A is
A. an inferior good. B. a normal good. C. a substitute for good B. D. a complement to good B.
When the U.S. real exchange rate appreciates, U.S. goods become
a. more attractive to consumers in the U.S. and abroad. b. more attractive to consumers in the U.S. and less attractive to consumers abroad. c. less attractive to consumers in the U.S. and abroad. d. less attractive to consumers in the U.S. and more attractive to consumers abroad.
If the aggregate demand curve shifts to the right in the short run then the long-run equilibrium will be at a:
A. higher price level and lower level of output. B. lower price level and higher level of output. C. higher price level and higher level of output. D. higher price level and same level of output.
Which of the following items is NOT a deficit item in the balance of payments?
A. imports of merchandise B. sales of domestic assets to foreigners C. military spending abroad D. purchases of gold from foreigners