Scenario 8.2: Yachts Are Produced by a Perfectly Competitive Industry in Dystopia

question 149

Multiple Choice

Scenario 8.2:
Yachts are produced by a perfectly competitive industry in Dystopia. Industry output (Q) is currently 30,000 yachts per year. The government, in an attempt to raise revenue, places a $20,000 tax on each yacht. Demand is highly, but not perfectly, elastic.
-Refer to Scenario 8.2. The more elastic is demand for yachts,

• A) the more Q will fall and the more P will rise.
• B) the less Q will fall and the more P will rise.
• C) the more Q will fall and the less P will rise.
• D) the less Q will fall and the less P will rise.
• E) the closer is the new equilibrium point to the old.

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Definitions:

Weighted-Average Method

The costing technique for inventory that assesses the cost of goods sold and the final inventory by averaging the costs of all units on offer for sale during the time frame.

Molding Department

A specialized section in a manufacturing facility where molding processes, such as injection molding or compression molding, are carried out to produce parts or components.

Work in Process

Items in production that are not yet completed; a part of inventory.

Molding Department

A production sector within a manufacturing facility where raw materials are shaped into components or products using molds.