Suppose an economist advises a city's mayor to begin charging drivers a fee to drive on a busy highway during congested times. The mayor does not implement the policy because it would not be popular with voters. Which of the following statements best describes the scenario?
a. This is a common occurrence. The policymaker knows the best policy but chooses not to institute it for other reasons.
b. This is a common occurrence. The policymaker usually disregards an economist's advice because they do not believe it is the most efficient policy.
c. This is an unlikely occurrence. Most of the time, policymakers follow the advice of economists and institute the most efficient policies.
d. This would never happen. Policymakers always follow the advice of economists.
a
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If neither the demand nor supply of a good is perfectly elastic or inelastic, a tax on the good ________ consumer surplus and ________ producer surplus
A) decreases; decreases B) increases; increases C) decreases; increases D) increases; decreases E) decreases; does not change
The demand for chocolate is perfectly inelastic in Foodieland. If a tax is imposed on chocolate, ________
A) the deadweight loss due to taxation will be high B) the deadweight loss due to taxation will be one C) consumers will stop consuming chocolate D) the tax burden will fall entirely on buyers