ECON 2302 Chapter 18. Multiple-Choice Homework
About how much of the tax is paid by consumers in the form of higher prices?
35 cents
Statement 1. A perfectly elastic demand curve has an elasticity of zero. Statement 2. When demand is elastic and price is raised, total revenue will fall.
Statement 2 is true, and statement 1 is false.
Statement 1: When demand is inelastic and price is lowered, total revenue will rise. Statement 2: Demand is unit elastic when elasticity is one.
Statement 2 is true, and statement 1 is false.
Over time the supply of a particular good or service tends to ________.
become more elastic
If your income goes down by 15 percent and you cut back on your manicures by 25 percent, then your demand for manicures is ________.
income elastic
A firm seeking to maximize its total revenue would lower its price until price elasticity of demand was ________.
one
If supply is perfectly inelastic, a tax increase is borne ________.
only by the seller
When demand is perfectly elastic, a tax increase is borne ________.
only by the seller
A tax will ________.
raise price and lower supply
Supply is most elastic in ________.
the long run
