The supply of milk in Nexus City is perfectly elastic. If a tax is imposed on each gallon of milk sold, ________
A) the burden of the tax will fall entirely on the sellers
B) the burden of the tax will fall entirely on the buyers
C) the tax incidence on the sellers is higher than that on the buyers
D) the deadweight loss due to taxation is zero
B
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We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will decrease when
A) supply increases and demand decreases B) supply decreases and demand increases. C) supply and demand for a product simultaneously decrease. D) supply and demand for a product simultaneously increase.
The idea that changes in investment and changes in national income are mutually reinforcing is the foundation of
a. the sunspot theory b. the war-induced cycle c. the housing cycle d. the innovation cycle e. internally generated cycles