Suppose the demand for picture frames is elastic and the supply of picture frames is inelastic. A tax of $1 per frame levied on buyers of picture frames will increase the equilibrium price paid by buyers of picture frames by
a. $1.
b. more than $0.50 but less than $1.00.
c. a positive amount but less than $0.50.
d. It is impossible to say without more information.
Answer: C
Microeconomics
- An increase in the price level may be caused
- Which of the following events can cause short-term interest rates to increase?
- Suppose that wages increase sharply this year. Other things being equal a wide-spread increase in wages will have which of the following consequences for the U.S. economy?
- An unanticipated increase in inflation this year will
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- Which of the following is an example of a contractionary fiscal policy that can be used to decrease aggregate demand and prevent inflation?
- Which of the following statements about the federal budget deficit is true?
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- Suppose the equilibrium GDP is greater than potential real GDP. Which of the following is likely?
- Current equilibrium GDP is less than potential real GDP. According to the classical model of macroeconomic equilibrium, which of the following is true?
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- The supply of land is perfectly inelastic when