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Question
Consumers will lose no consumer surplus due to a tax if
a. demand is somewhat elastic.
b. supply is perfectly elastic.
c. supply is somewhat elastic.
d. demand is perfectly elastic.
e. demand is perfectly inelastic.
Answer
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What is the long-run consequence of a price ceiling law?
a. A surplus will continue to exist and will grow larger over time.
b. A surplus will continue to exist and will grow smaller over time.
c. A shortage will continue to exist and will grow larger over time.
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Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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a. Demand for jelly will increase along with the price.
b. Demand for jelly will decrease along with the price.
c. The supply of jelly will increase and the price will decrease.
d. Both the supply and demand for jelly will increase along with the price.
e. The supply of jelly will decrease and the price will increase.
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A tax on milk would likely cause a decrease in the price ofa. ice cream. b. cheese. c. soymilk.d. nondairy creamer.e. breakfast cereal.
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A tax creates no deadweight loss only when either supply or demand isa. somewhat elastic. b. perfectly elastic. c. perfectly inelastic.d. increasing.e. decreasing.
Q:
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