The Demand Curve for Rutabagas Is a Straight Line with Slope

question 22

Multiple Choice

The demand curve for rutabagas is a straight line with slope 23 and the supply curve is a straight line with slope 2.Suppose that a new tax of $3 per sack of rutabagas is introduced.

• A)The total number of rutabagas purchased increases.
• B)The price paid by demanders rises by the same amount as the price received by suppliers falls.
• C)The price received by suppliers falls by more than the price paid by demanders rises.
• D)The price paid by demanders rises by more than the price received by suppliers falls.
• E)The price paid by demanders rises by more than $3.

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Definitions:

Capital Investment

The purchase of goods or services by a firm to add to its fixed assets to increase its capacity or efficiency in producing goods or services.

Consumption

The use of goods and services by households, one of the major components of an economy’s gross domestic product, indicating economic health and consumer confidence.

Term of a Bond

The length of time until a bond's maturity date, when the principal amount of the bond is due to be paid to the bondholder.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, that lenders charge borrowers for the use of their funds.