The government has instituted a subsidy (paid to the buyers) of 3000 pounds per electric car bought in 2017. The electric car industry is competitive. Which of the following statements is true? The deadweight loss caused by the subsidy is minimal if the elasticity of supply is infinite. Buyers gain more from the subsidy than sellers if demand is more inelastic than supply. The final price paid by consumers of electric cars will increase by 3000 if supply is perfectly inelastic.

The government has instituted a subsidy (paid to the buyers) of 3000 pounds per electric car bought in 2017. The electric car industry is competitive. Which of the following statements is true? The deadweight loss caused by the subsidy is minimal if the elasticity of supply is infinite. Buyers gain more from the subsidy than sellers if demand is more inelastic than supply. The final price paid by consumers of electric cars will increase by 3000 if supply is perfectly inelastic.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 5SQ: Price elasticity of demand tends to be larger in the long run than in the short run. Which of the...

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