The government raises gasoline taxes as part of the price of gasoline and receives more tax revenues. However, after five years, the government discovers that revenues from the gasoline tax have declined. This situation would be most likely to occur if
A. the long-run elasticity of demand was greater than the long-run elasticity of supply.
B. the demand for gasoline was perfectly inelastic in both the short run and the long run.
C. the long-run elasticity of supply was much greater than the long-run elasticity of demand.
D. the demand for gasoline was inelastic in the short run, but elastic in the long run.
Answer: D
You might also like to view...
A labor market is divided into two segments. All workers have the same qualifications and find jobs in either segment equally attractive. Initially, both segments are in competitive equilibrium. If the development of employer prejudice then reduces the employment of minorities in one segment, there will be a
a. permanent drop in labor supply to the discriminating segment b. permanent increase in labor supply to the nondiscriminating segment c. temporary drop in labor supply to the discriminating segment d. permanent drop in labor demand to the discriminating segment e. temporary drop in labor demand to the nondiscriminating segment
A table that shows the relationship between the price of a good and the quantity demanded of that good is called a
a. price-quantity schedule. b. buyer schedule. c. demand schedule. d. demand curve.
If M doubled and V fell by 50%, what would happen to PQ?
What will be an ideal response?
Any transaction that causes foreign exchange to leave a country is a
A. credit item in that country's balance of trade. B. debit item in that country's balance of payments. C. debit item in that country's balance of trade. D. credit item in that country's balance of payments.