Goods that are heavily taxed, such as alcohol and cigarettes, often have:
a. relatively inelastic demand, such that the tax burden falls primarily on sellers and the deadweight loss associated with the tax is smaller than if demand were elastic.
b. relatively elastic demand, such that the tax burden falls primarily on sellers and the deadweight loss associated with the tax is smaller than if demand were inelastic.
c. relatively inelastic demand, such that the tax burden falls primarily on buyers and the deadweight loss associated with the tax is smaller than if demand were elastic.
d. relatively elastic demand, such that the tax burden falls primarily on buyers and the deadweight loss associated with the tax is smaller than if demand were inelastic.
c
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What kind of changes would be expected in the demand of a country that has an increasing population?
a. a rise in the demand for recreation b. a shift in the demand for high-quality food c. a rise in the demand for shelter d. a lowering in the demand for automobiles
If there is a decrease in world oil prices and the Fed wishes to maintain output stability, what should it do?
a. Buy bonds in the open market. b. All the economy to adjust itself. c. Sell bonds in the open market. d. Impose higher taxes to counteract the supply shock. e. Lower taxes to maintain output.