The share of the burden of an emissions tax on output borne by the consumer of the polluting output will rise as
a. the tax rises.
b. demand elasticity falls.
c. demand elasticity rises.
d. the tax falls.
b
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The sacrifice ratio is
A) the amount of output lost when the inflation rate is reduced by one percentage point. B) the percentage reduction in inflation when output falls one percentage point below potential. C) the percentage change in employment when output declines by one percentage point. D) the number of percentage points that the unemployment rate rises when output declines by one percentage point.
A change in an input price will alter both production costs and the profit-maximizing output. Thus, a decline in the price of capital will reduce production costs, increase the profit- maximizing output, and thereby increase the demand for labor. This
describes the: A. output effect. B. substitution effect. C. idea of derived demand. D. law of diminishing returns.