What is the shape of a perfectly elastic demand curve? Explain its significance for a seller
The perfectly elastic demand curve is horizontal and parallel to the X axis. A slight increase in the price will drop the quantity demanded to zero. It means that the seller will lose all of her customers if she raises her price even slightly.
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Refer to Figure 4-15. As a result of the tax, is there a loss in consumer surplus?
A) No, because the producer pays the tax. B) No, because the market reaches a new equilibrium C) No, because consumers are charged a lower price to cover their tax burden. D) Yes, because consumers pay a price above the economically efficient price.
A banking system that provides people immediate access to their deposits, but that allows banks to hold only a portion of those deposits on reserve, is known as:
a. an excess reserve system. b. a fractional reserve system. c. the Fed. d. the FDIC. e. an asset-based system.