If the market supply curve is perfectly elastic and an excise tax is imposed,
a. all of the tax is paid by buyers
b. all of the tax is paid by sellers
c. the tax burden is divided equally between buyers and sellers
d. the market price will not change
e. the market price will fall by the amount of the tax
A
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The cost-plus-markup theory is an inadequate explanation of relative prices because
A) it does not explain why there is a standard percentage markup in most industries. B) it is too simple, and simple theories are rarely as useful as more complex theories. C) the theory is inconsistent with observable relationships between marginal costs and prices. D) people who actually set prices do not describe the process as cost-plus.
A shift in the demand curve will occur when
A) supply shifts. B) the price of an input used to produce the good changes. C) consumers' income changes. D) the price of the product changes.