Which of the following statements is TRUE about taxes?
A) Taxes always create more deadweight loss than do price ceilings and price floors.
B) Taxes decrease both consumer surplus and producer surplus while creating a deadweight loss.
C) Government revenue from a tax is always greater than the loss of producer surplus and consumer surplus.
D) Both answers A and C are correct.
B
Economics
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What factors determine the magnitude of the price elasticity of demand?
What will be an ideal response?
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A firm in a perfectly competitive industry faces the following cost and revenue conditions: ATC = $6; AVC = $3; MR = MC = $5. The firm is
A) earning economic profits. B) experiencing economic losses. C) experiencing zero profits. D) in a position in which it should shut down.
Economics