Suppose the cost of raw materials used by the cotton industry rises to a larger extent compared to the increase in demand in the market. Which of the following situations will arise?
a. The incidence of the higher cost will fall completely on the consumers.
b. The incidence of the higher cost will fall completely on the high cost firms.
c. The incidence of the higher cost will fall completely on the low cost firms.
d. The incidence of the higher cost will fall partially on the consumers and partially on the sellers.
D
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Relative to fiscal policy, monetary policy
a. has fewer harmful side effects. b. requires much more time to implement. c. is more closely controlled by Congress. d. is much more independent of the political process.
Which of following is a key assumption of a perfectly competitive market?
A) Firms can influence market price. B) Commodities have few sellers. C) It is difficult for new sellers to enter the market. D) Each seller has a very small share of the market. E) none of the above