3.00 S' 2.80 2.60 2.40 S t=0.60 2.20 2.00 1.80 1.60 1.40 1.20 D 1.00 .80 .60 .40 .20 100 200 300 400 500 600 700 800 900 1000 1100 1200 Bottles of Soft Drinks per Day Price ($)
Refer to Figure 2. Suppose the government imposes a tax of $0.60 per soft drink purchased. When it comes to the economic incidence, who is bearing the tax burden, buyers, or sellers? Explain using actual numbers
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1) Suppose the government introduces a ceiling on the fees that lawyers are permitted to charge. This fee ceiling
A) is always inefficient.
B) results in an inefficient use of resources when the ceiling is above the equilibrium fee.
C) results in an efficient use of resources when the ceiling is above the equilibrium fee.
D) results in an efficient use of resources when the ceiling is below the equilibrium fee.
E) is always efficient.
2) An effective rent ceiling
A) increases
C) sometimes increases producer surplus and sometimes decreases producer surplus.
D) decreases producer surplus. E) decreases the supply of housing.
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