Taxes:
A. cause the price consumers pay to equal the price suppliers receive.
B. create a wedge between the price consumers pay and the price suppliers receive.
C. cause the equilibrium quantity to increase.
D. cause market shortages.
Answer: B
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A demand curve shows the relationship between price and quantity demanded only so long as all other things are held constant.
Answer the following statement true (T) or false (F)
The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino?
A) $1.00 B) $2.50 C) 2/5 of a Russian tea cake D) 2 1/2 Russian tea cakes
Interest rate parity is more likely to hold in the short run than purchasing power parity
Indicate whether the statement is true or false
Which of the following will NOT lead to a decrease in demand for a normal good?
A) an increase in income B) an increase in the price of an input C) a decrease in the price of a complement good D) an increase in the number of consumers