If the Supply Curve Is Perfectly Inelastic and the Demand

question 46

Multiple Choice

If the supply curve is perfectly inelastic and the demand curve is a downward sloping straight line,what is the effect of a consumer ad valorem tax on equilibrium price and quantity?

• A) Price remains unchanged and quantity increases.
• B) Price decreases and quantity increases.
• C) Price decreases and quantity remains unchanged.
• D) Price and quantity decrease.

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Definitions:

Action Alternatives

Refers to different strategies or courses of action that an organization or individual might choose to address a particular problem or situation.

Cognitive Styles

The ways individuals deal with information while making decisions.

Higher-level Managers

Managers who operate at the top echelons of an organization, focusing on strategic decision-making and organizational direction.

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Regular, unvarying procedures or sequences of actions that are followed consistently.