Suppose that a $4 per unit tax is imposed on the sellers of DVDs. The effect of the tax will be to
a. shift the supply curve up by exactly $4 and the price paid by buyers will remain unchanged.
b. shift the supply curve up by exactly $4 and the price paid by buyers will rise by less than $4.
c. shift the supply curve up by exactly $4 and the price received by sellers will rise by exactly $4.
d. shift the demand curve down by exactly $4 and the price paid by buyers will fall by exactly $4.
b
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In evaluating the degree of economic efficiency in a market, we can state that the size of the deadweight loss in a market will be smaller
A) the greater the difference between marginal cost and average revenue. B) the smaller the difference between marginal cost and price. C) the greater the difference between marginal cost and price. D) the smaller the difference between marginal cost and average total cost.
All of the following are reasons that trade between nations is beneficial EXCEPT
A) gains from specialization. B) exchange of ideas. C) protection of domestic industries. D) gains from trade.