A few years ago, the city of Seattle, Washington, considered imposing a specific tax on all espresso-based coffee drinks sold in the city. The extra tax revenue generated would have been used to fund after-school programs for low-income children
The coffee-house owners (firms) agreed that this would be a good program to fund, but they argued that the tax would sharply reduce their sales volume and they would pay most of the tax burden. This claim is true if: A) the demand for espresso-based coffee is more inelastic than supply.
B) the demand for espresso-based coffee is more elastic than supply.
C) there are no close substitutes for espresso-based coffee drinks.
D) espresso-based coffee drinks can be produced at constant marginal cost.
B
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The figure above shows the production possibilities frontier for a country. The opportunity cost of a gallon of milk between combination point A and B is
A) 1/3 of a gallon of ice cream for a gallon of milk. B) 4 gallons of ice cream for a gallon of milk. C) 1 gallon of ice cream for a gallon of milk. D) 3 gallons of ice cream for a gallon of milk. E) zero because at point A, zero milk is being produced.
Low-wage manufacturing industries exhibit which of the following?
(a) Low output per worker (b) Added value that rises above labor's share of total employment (c) Highly educated and skilled workers (d) All of the above