Which of the following generalizations about the benefit of a subsidy is correct?
a. The more inelastic the supply of a product, the larger the portion of the benefit will be to buyers.
b. The more inelastic the demand for a product, the larger the portion of the benefit will be to buyers.
c. The more elastic the supply of a product, the smaller the portion of the benefit will be to buyers.
d. The distribution of the benefit of a subsidy is not affected by the elasticity of the supply and demand for the product for which the subsidy is granted.
B
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A) increase B) decrease C) have no effect on D) none of the above
A monopoly will NOT be able to perfectly price discriminate if
A) obtaining information about each buyer's reservation price is too costly. B) demand is very elastic. C) demand is very inelastic. D) resale is impossible.