Suppose a tax is imposed on baseball bats. In which of the following cases will the tax cause the equilibrium quantity of baseball bats to shrink by the smallest amount?
a. The response of buyers to a change in the price of baseball bats is strong, and the response of sellers to a change in the price of baseball bats is weak.
b. The response of sellers to a change in the price of baseball bats is strong, and the response of buyers to a change in the price of baseball bats is weak.
c. The response of buyers and sellers to a change in the price of baseball bats is strong.
d. The response of buyers and sellers to a change in the price of baseball bats is weak.
d
You might also like to view...
Suppose there are ten identical manufacturing firms that produce computer chips with machinery (capital, K) and labor (L), and each firm has a production function of the form q = 10KL0.5. What is the industry-level production function?
A) Q = 10K10L5 B) Q = 100KL0.5 C) Q = 100L0.5 D) none of the above
A profit maximizing monopoly will produce that output for which:
a. marginal revenue equals price. b. average cost is minimized. c. marginal cost is minimized. d. marginal cost equals marginal revenue.