Which of the following is true of taxes?
What will be an ideal response?
Taxes drive a wedge between what buyers pay and what sellers receive.
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If a price ceiling is introduced in the market for milk below the market equilibrium price, then the producer surplus made by dairy farmers
A) will increase. B) will decrease. C) will not change. D) might increase or decrease depending on whether the demand for milk increases or decreases. E) might increase or decrease depending on whether the supply of milk decreases or increases.
Refer to the accompanying figure.
Starting from long-run equilibrium at point C, an adverse inflation shock that increases inflation from ? to ?1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. A; C B. A; B C. B; A D. B; C
The management of Local Cinema has estimated the monthly demand for tickets to be ln Q = 22,328 ? 0.41 ln P + 0.5 ln M ? 0.33 ln A + 100 ln PDVD, where Q = quantity of tickets demanded, P = price per ticket, M = income, A = advertising outlay, and PDVD = price of a DVD rental. It is known that P = $5.50, M = $9,000, A = $900, and Pvcr = $3.00. Based on the information given, which of the following statements is false?
A. Movies are normal goods. B. The advertising elasticity of demand for movie tickets is ?0.33. C. Advertising decreases the demand for movie tickets. D. Movies are complements for DVD rentals.
The U.S. Customs Service is a main source of data for:
A. C B. I g C. G D. X