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Question
Producers will lose no producer surplus due to a tax if
a. supply is somewhat elastic.
b. demand is somewhat elastic.
c. supply is perfectly elastic.
d. demand is perfectly elastic.
e. supply 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.
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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 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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