Given a downward sloping demand curve, a tax on the supply of a good will result in an increase in equilibrium price that is less than the amount of the tax.
Answer the following statement true (T) or false (F)
True
At a price equal to the original price plus the tax, demanders are not willing to purchase the original quantity. At the original equilibrium price plus the tax, quantity supplied exceeds quantity demanded. To eliminate excess supply, suppliers lower the price until quantity demanded equals quantity supplied.
You might also like to view...
Often bar owners will require that patrons stand in a line to get a wristband entitling them to pay a preferred price for drinks if they arrive early to the bar
The wristbands are typically tamper- resistant and can be easily identified if patrons have been switching wristbands with other customers. What is the bar owner concerned about and why does he make his patrons wear these bands?
"I'm tired of eating muffins for breakfast. Today I am trying a bagel." This statement most clearly reflects the: a. ceteris paribus condition
b. the law of supply. c. law of diminishing marginal utility. d. law of comparative advantage.
Under the Clayton Act,
a. the same person cannot sits on the boards of directors of competing corporations b. mergers are illegal c. price discrimination is illegal d. monopoly is illegal e. the Sherman Act was repealed
What will shift the short run aggregate supply curve to the left?
a. an increase in the quantity of capital b. an increase in inflationary expectations c. an increase in interest rates d. a technological advance