The managers of government bureaucracies have an incentive to _____
a. maximize the size of their budgets
b. minimize the size of their staff
c. maximize the profits from their bureaus
d. minimize rent-seeking
a
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Explain the effect of price elasticities of supply and demand on tax incidence
What will be an ideal response?
Suppose there is only one gas station within hundreds of miles. The owner finds that when she charges $3 a gallon, she sells 199 gallons a day, and when she charges $2.99 a gallon, she sells 200 gallons a day. The owner, obviously, is ________ and the marginal revenue of the 200th gallon of gas is __________
a. a perfect competitor (because all gas stations are perfect substitutes); $.01 b. a monopolist; $1 c. a monopolist; $2.99 d. in monopolistic competition (because gas is perceived as a differentiated product); $3 e. in monopolistic competition (because gas is perceived as a differentiated product); $600