Suppose a Tax Is Imposed on Baseball Bats

question 37

Multiple Choice

Suppose a tax is imposed on baseball bats.In which of the following cases will the tax cause the equilibrium quantity of baseball bats to shrink by the smallest amount?

• A)The response of buyers to a change in the price of baseball bats is strong,and the response of sellers to a change in the price of baseball bats is weak.
• B)The response of sellers to a change in the price of baseball bats is strong,and the response of buyers to a change in the price of baseball bats is weak.
• C)The response of buyers and sellers to a change in the price of baseball bats is strong.
• D)The response of buyers and sellers to a change in the price of baseball bats is weak.

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Definitions:

Spontaneity

The quality of being impulsive or of acting without premeditation.

Innovation

The process of creating new ideas, products, or methods that add value or solve existing problems.

Decision-Making

The cognitive process of selecting a course of action among multiple alternatives to achieve a specific goal.

Risk

The potential for loss or adverse outcomes arising from a variety of factors, including financial, operational, reputational, or external events.