Jim has estimated elasticity of demand for gasoline to be 0.7 in the short-run and 1.8 in the long run. A decrease in taxes on gasoline would:
a. lower tax revenue in both the short and long run.
b. raise tax revenue in both the short and long run.
c. raise tax revenue in the short run but lower tax revenue in the long run.
d. lower tax revenue in the short run but raise tax revenue in the long run.
d
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Suppose Lisa spends all of her money on books and coffee. When the price of coffee decreases, the
A) substitution effect on coffee is positive, and the income effect on coffee is positive. B) substitution effect on coffee is ambiguous, and the income effect on coffee is ambiguous. C) substitution effect on coffee is positive, and the income effect on coffee is ambiguous. D) substitution effect on coffee is ambiguous, and the income effect on coffee is positive.
What are some of the key economic factors that characterize countries with poor growth records?