Suppose the price elasticity of demand for Mexican food is 1.23 and the price elasticity of supply is 0.47. If the government imposes a tax on Mexican food, do buyers or sellers pay most of the tax? Why?
What will be an ideal response?
Sellers pay most of the tax because supply is inelastic while demand is elastic. There are many substitutes for the good, so unless sellers are willing to pay most of the tax, buyers spend their money on other types of food.
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If the total cost of producing 10 units equals $90, and the average total cost of producing 11 units equals $8.75, then the marginal cost of the eleventh unit produced: a. is definitely greater than the marginal cost of producing the tenth unit. b. is definitely less than the marginal cost of producing the tenth unit. c. is less than the average total cost of producing ten units
d. is greater than the average total cost of producing ten units.
Most developing countries (DVCs) exhibit a low level of:
A. Illiteracy B. Population growth C. Life expectancy D. Infant mortality