Question

18.In which situation would consumers bear the highest incidence of a tax? a) an elastic demand...

18.In which situation would consumers bear the highest incidence of a tax? a) an elastic demand with an elastic supply b) an inelastic demand with an inelastic supply c) an elastic demand with an inelastic supply d) an inelastic demand with an elastic supply

19.Which of these is not a problem caused by an effective price ceiling being placed on the price of electricity? a) a reduced effort to improve quality of service b) a misallocation of resources c) a reduction in deadweight loss d) a shortage of electricity

20.A firm increases its price for a good and total revenues increase. From this, we can conclude that its demand:a) is price elastic. b) is unitary elastic. c) has zero elasticity. d) is price inelastic.

Homework Answers

Answer #1

18. C.)) Elastic demand with an inelastic supply.

When supply is more elastic than demand, consumers bear most of the tax burden.

When demand is more elastic than supply, producers bear most of the cost of the tax.

19. C.) A reduction in deadweight loss

Five important effects of Price ceilings

1. Shortages
2. Reductions in product quality
3. Wasteful lines and other search costs
4. A loss of gains from trade
5. Misallocation of resources

20. D.) Is price inelastic.

When demand is inelastic – a rise in price leads to a rise in total revenue

When demand is elastic – a fall in price leads to a rise in total revenue

When demand is perfectly inelastic (i.e. Ped = zero), a given price change will result in the same revenue change

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following sentences about tax incidence is true? I. If demand is relatively elastic,...
Which of the following sentences about tax incidence is true? I. If demand is relatively elastic, producers will bear a greater burden of the tax than consumers. II. If supply is completely inelastic, producers will bear all the burden of the tax. III. If the supply curve is completely elastic, consumers will bear none of the burden of the tax. Group of answer choices II and III only. III only I, II and III. II only. I and II only.
24. When demand is infinitely elastic (ceteris paribus), and there is technological advance which shifts the...
24. When demand is infinitely elastic (ceteris paribus), and there is technological advance which shifts the supply curve, we should expect that in this market a. none of the other answers are correct. b. equilibrium quantity declines. c. the supply curve moves leftward. d. the new equilibrium price remains unchanged. 25. The burden of a sales tax will fall most heavily upon the consumers when a. demand has unitary elasticity. b. supply is more elastic. c. demand is more elastic....
2. Suppose supply is perfectly inelastic and demand is relatively elastic. Who bear all the tax...
2. Suppose supply is perfectly inelastic and demand is relatively elastic. Who bear all the tax burden, buyers or sellers? Explain in details. 3. Suppose demand for electricity is inelastic, but not perfectly. A sales tax is imposed, and the tax is levied on buyers. Draw a graph to show the effects of the tax. Indicate CS, PS, tax revenue and DWL after tax on your graph.
If the income elasticity of demand for lard is -3.00, this means that: lard is an...
If the income elasticity of demand for lard is -3.00, this means that: lard is an inferior good. more lard will be purchased when its price falls. demand for lard is price inelastic. demand for lard is price elastic The more elastic the supply and the demand curves are: the smaller surplus an effective price ceiling will create. the greater surplus an effective price ceiling will create. the greater shortage an effective price ceiling will create. the smaller shortage an...
Tax incidence focuses on who: A) has the most elastic demand B) has the most inelastic...
Tax incidence focuses on who: A) has the most elastic demand B) has the most inelastic supply C) bears the economic burden of a tax D) bears the statutory or legal burden of a tax
4. If Supply and Demand have the normal shapes (not perfectly elastic or inelastic), a "tax...
4. If Supply and Demand have the normal shapes (not perfectly elastic or inelastic), a "tax on sellers" (as defined by Mankiw) will shift demand upward by less than the amount of the tax, and equlibrium posted price will increase by the same amound as the tax.   True or False? 6. If Supply and Demand have the normal shapes (not perfectly elastic or inelastic), a "tax on sellers" (as defined by Mankiw) will shift demand upward by the amount of...
(60)A perfectly inelastic demand curve has an elasticity coefficient of: (a)1 (b)0.25 (c)∞ (d)None of the...
(60)A perfectly inelastic demand curve has an elasticity coefficient of: (a)1 (b)0.25 (c)∞ (d)None of the above Akal mn wahed Extra Credit Questions-Optional (61)If the percentage change in the quantity supplied of a good is less than the percentage change in price, price elasticity of supply is: (a)Inelastic (b)Perfectly inelastic (c)Elastic (d)Unitary elastic (62)If the percentage change in the quantity demanded of a good is equal to the percentage change in price, price elasticity of demand is: (a)Inelastic (b)Perfectly inelastic...
Deadweight losses arising from an excise tax are greatest when demand: A. and supply are relatively...
Deadweight losses arising from an excise tax are greatest when demand: A. and supply are relatively elastic B. is relatively inelastic and supply is relatively elastic C. and supply are relatively inelastic. D. is relatively elastic and supply is relatively inelastic.
Firms are indifferent to changing prices when the price elasticity of demand is a inelastic. b...
Firms are indifferent to changing prices when the price elasticity of demand is a inelastic. b perfectly elastic. c elastic. d perfectly inelastic. e unitary elastic. Price gouging laws are an example of a a price ceiling. b prices to allow rationing to the highest bidder. c rules for keeping market prices low enough for buyers to afford the product. d rules to prevent a market shortage. e rules to prevent black market pricing. Which of the following is true,...
For a unitary elastic demand curve, the price elasticity of demand is everywhere ___________ and total...
For a unitary elastic demand curve, the price elasticity of demand is everywhere ___________ and total expenditures on the good ________________ as price increases. Select one: a. - 1, decreases b. - 1, remain constant c. - 1, increases d. undefined, increases