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15 Apr 2018
12. [3 Marks) Assume a perfectly competitive market with demand MWTPQ) = 100-Q and perfectly elastic supply at P = $70. All benefits accrue to the buyer and all costs are borne by the seller. What will be the result of the introduction of a per-unit tax (payable by sellers)? A. Consumer spending on this good definitely decreases. B. Consumer spending on this good definitely increases. C. Consumer surplus increases. D. Total surplus increases. E. The decrease in consumer surplus equals the increase in government surplus.
12. [3 Marks) Assume a perfectly competitive market with demand MWTPQ) = 100-Q and perfectly elastic supply at P = $70. All benefits accrue to the buyer and all costs are borne by the seller. What will be the result of the introduction of a per-unit tax (payable by sellers)? A. Consumer spending on this good definitely decreases. B. Consumer spending on this good definitely increases. C. Consumer surplus increases. D. Total surplus increases. E. The decrease in consumer surplus equals the increase in government surplus.
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Beverley SmithLv2
16 Apr 2018