Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by
a. less than $0.50.
b. $0.50.
c. between $0.50 and $1.
d. $1.
c
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The consumption function will shift with
A) a decrease in real disposable income. B) a change in saving. C) a change in household wealth. D) an increase in real disposable income.
Economists assume that business firms attempt to maximize their profits.
Answer the following statement true (T) or false (F)
Suppose the observed annual quantity of steel exchanged in the European market is 30 million metric tons, and the observed market price is 90 euros per ton
If the price elasticity of demand for steel is -0.3 in Europe, what is an appropriate value for the price coefficient (b) in a linear demand function Q = a - bP? A) b = 0.9 B) b = -0.9 C) b = 0.1 D) b = -0.1
Politicians have suggested that the budget deficit could be reduced by
A) increasing taxes and reducing expenditures. B) lowering the interest rates. C) imposing higher tariffs on imported goods. D) forbidding interest payments on government bonds outsourcing.