Assume the government introduces a $0.50 per gallon tax on gasoline. Which of the following is true?
A. The quantity of cars manufactured by producers will increase.
B. The quantity of subway and bus tickets sold is likely to increase.
C. The quantity of gasoline sold is likely to increase.
D. The quantity of cars sold is likely to increase.
Answer: B
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The quantity of labor demanded definitely increases if the
A) supply of labor decreases. B) real wage rate falls. C) nominal wage rate rises. D) real wage rate rises. E) nominal wage rate falls.
Suppose the cost of a CD is $20. As online retailers enter the market with new technology, the price of CDs ________, and traditional music stores find that ________
A) decreases; their AVC exceeds the new lower price and they exit the industry B) decreases; their ATC curve shifts lower and their profit increases C) increases; they compete with online retailers at the new higher price D) increases; their costs have risen due to the new technology E) decreases; they compete with online retailers with higher profits
If the demand curve is a downward sloping straight line, the price elasticity of demand always
A) increases as the demand curve shifts rightward. B) increases as the demand curve shifts leftward. C) increases with movements upward along the demand curve. D) decreases with movements upward along the demand curve.
A liquidity trap occurs when the
a. LM curve is steep. b. LM curve is vertical. c. LM curve is relatively flat. d. IS curve is flat.