Giving in to the demand of protestors, suppose the French government reduces the tax on gasoline by 15 percent. Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic
As a result of the tax cut, the price for a gallon of gasoline paid by buyers A) falls by 15 percent.
B) rises by 15 percent.
C) falls by less than 15 percent.
D) rises by less than 15 percent.
E) falls by more than 15 percent.
C
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In the long-run, a firm in monopolistic competition produces an amount of output that sets
A) P > ATC and MR = MC. B) P > ATC and MR > MC. C) P = ATC and MR = MC. D) P = ATC and MR > MC.
In the above figure, CBL is the cost of breaking the law. If the good in the figure is made illegal and penalties are imposed on both buyers and sellers, then its price per unit
A) will be higher than if it was not illegal. B) will be lower than if it was not illegal. C) will be the same as when it was not illegal. D) cannot be compared with its price when it was legal.