Statement I: a Perfectly Inelastic Supply Curve and a Perfectly

question 146

Multiple Choice

Statement I: A perfectly inelastic supply curve and a perfectly inelastic demand curve are represented the same way on a graph.
Statement II: A tax increase will increase supply.

• A)Statement I is true and statement II is false.
• B)Statement II is true and statement I is false.
• C)Both statements are true.
• D)Both statements are false.

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Definitions:

Duopoly

A market structure characterized by two dominant firms controlling the majority of the market share.

Natural Monopoly

A market structure where a single supplier is most efficient due to high fixed or start-up costs, often in industries like utilities.

Economies of Scale

The financial benefits businesses receive from their operational scale, where the cost for each unit produced tends to decrease as the scale of production increases since fixed costs are allocated over a greater quantity of output.

Preemption

A strategy or action taken to prevent an opponent from taking an action by being the first to act or by securing a strategic advantage.