How can we anticipate the proportion of a newly imposed unit excise tax that consumers will pay?
A. Consumers will pay most of the tax whenever their demand for the product is very price sensitive.
B. Consumers will pay most of the tax whenever their demand for a product is relatively unresponsive to price changes.
C. Consumers will always pay 100 percent of an excise tax.
D. Since producers always pay 100 percent of an excise tax, we know consumers will not pay any of the tax.
Answer: B
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a. price elasticity of demand. b. income elasticity of demand. c. cross elasticity of demand. d. inverse elasticity of demand.
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a. consumers are unwilling to pay for a good unless it provides them with value. b. an opportunity cost is always present when scarce resources are used to produce a good. c. it generally requires enormous effort to search out the best place to eat lunch. d. the value of a good to consumers will decrease as they have more of it.
In the Yap civilization of the South Pacific prior to 1920, large, heavy stones in the shape of a wheel were used as money. Which function of money was probably least served by this form of money?
A) medium of exchange B) store of value C) unit of account D) store of wealth
An increase in which of the following would cause an increase in aggregate supply?
a) labor productivity b) the wage rate c) prices of imports d) consumer spending e) interest rates