Suppose the government wants to discourage the use of cigarettes. If it imposes a tax on cigarettes, the equilibrium quantity falls the most when the elasticity of demand equals
A) 2.00.
B) 1.00.
C) 0.50.
D) 0.
A
You might also like to view...
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
Which of the following best explains why physical therapists' salaries have increased substantially over the last decade?
a. Physical therapists today are smarter. b. The supply of physical therapists has increased. c. The supply of physical therapists has decreased. d. The demand for physical therapists has increased. e. The demand for physical therapists has decreased.
If the transaction between you and the seller takes place at a price that equals your valuation of the product, then:
a. you realize all the gains from this transaction. b. the gains from this transaction are equally divided between the two of you. c. the entire economic value created by the transaction goes to the seller. d. the economic value created by this transaction is sub-optimal.
The market mix of output and the optimal mix of output are always the same.
Answer the following statement true (T) or false (F)