Franklin buys a bottle of his favorite brand of Scotch every Friday on his way home from work. A new tax means the price of the bottle has increased. Franklin could buy fewer bottles of Scotch, but he might also choose to:
a. calculate how many utils he gets per glass from a bottle.
b. create a demand curve that demonstrates ceteris paribus.
c. switch to drinking bourbon.
d. cut back on a different expense so he can pay the higher price of the Scotch.
d. cut back on a different expense so he can pay the higher price of the Scotch.
If a tax on alcohol leads to a higher price at the liquor store, the higher price of alcohol causes the budget constraint to pivot left, and consumption of alcoholic beverages is likely to decrease. However, people may also react to the higher price of alcoholic beverages by cutting back on other purchases.
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Typically, as an economy begins to emerge from a recessionary phase of the business cycle,
A) unemployment falls immediately. B) inflation begins to fall. C) unemployment continues to rise. D) investment begins to fall.
A ________ yield curve predicts a future increase in inflation
A) steeply upward sloping B) slight upward sloping C) flat D) downward sloping
Which of the following industry types features a horizontal long-run supply curve?
a. An increasing-cost industry b. A constant-cost industry c. A decreasing-cost industry d. A monopolistically competitive industry
In 1984, the South Carolina State Supreme Court ruled that a 20 percent admission tax on X-rated movies was unconstitutional. When the affected cinemas sought a refund of collected taxes, they were denied on the grounds that the tax, although collected by the theater, was indeed paid by the theatergoers. The Supreme Court apparently believed
A. the supply of X-rated movies was perfectly elastic. B. the demand for X-rated movies was perfectly inelastic. C. the legislation intended that the theatergoers pay the tax. D. the burden fell on the theatergoers—there are no excess burdens on the theater.