Heavy business taxes
(a) vary according to firm size.
(b) benefit small firms but cost large ones.
(c) stifle entrepreneurial activity.
(d) can be described by all of the above.
(c)
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Which of the following does not illustrate the asymmetric information problem:
A. Ordinary financial investors do not know the motivations of financial advisers B. Ordinary customers do not know how sanitarily the food is prepared in a restaurant C. Ordinary stock-buyers do not know what will happen to the stock's price next week D. Ordinary car buyers do not know the actual quality of the various cars in the dealer's lot
There is concern that CFCs, a chemical by-product of refrigeration, are destroying Earth’s protective ozone layer, leaving us more vulnerable to cataracts and skin cancer. Suppose each air conditioner creates 10 pounds of CFCs. The demand and supply of air conditioners follow: Price (dollars) 400 350 300 250 200 Quantity demanded 10 12 14 16 18 Quantity supplied 18 16 14 12 10 What will be the free-market price and quantity, and what will be the price and quantity if the government forces suppliers to pay a $100 tax for each air conditioner produced?
What will be an ideal response?