A Good Has a Downward-Sloping Demand Curve and a Perfectly

question 322

Multiple Choice

A good has a downward-sloping demand curve and a perfectly elastic supply. Imposing a sales tax of $1 per unit on the sellers of the good

• A) raises the price paid by demanders by more than $1.00.
• B) raises the price paid by demanders by $1.00.
• C) raises the price paid by demanders by less than $1.00.
• D) does not change the price paid by demanders.

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Definitions:

Relative Cheaper

The comparison of the cost of one product or service to another, indicating that the former is less expensive.

Labor-Intensive

Describing a process or industry that requires a large amount of labor to produce its goods or services.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors, which enhances efficiency in international trade.

Production Possibilities

A curve or frontier representing the maximum combination of goods and services that can be produced efficiently with available resources and technology.