Direct taxes are levied on specific economic activities.

If a large change in the variable measured on the x-axis is associated with a small change of the variable measured on the y-axis, the line is ________ and the slope is ________

A) downward-sloping; large B) downward-sloping; small C) upward-sloping; small D) either downward or upward-sloping; small

If new firms are currently entering a perfectly competitive market, which of the following is true?

a. Existing firms are losing money. b. Existing firms are earning positive economic profits. c. Existing firms are just breaking even. d. Impossible to predict.