Soft drinks is price elastic and supply is price inelastic

Reference no: EM13696630

Suppose that the demand for soft drinks is price elastic and the supply is price inelastic. If the government imposes a sales tax on soft drinks, which of the following will occur?

a) The tax will fall equally on both consumers and producers.

b) The tax will fall more on producers.

c) The tax will fall more on consumers.

d) The percentage increase in the price of soft drinks will be greater than the percent decrease in quantity demanded

e) the percent decrease in total revenue will be greater than the percent decrease in the quantity demanded.

Reference no: EM13696630

Questions Cloud

Public school principals : Each year, public schools are rewarded with bigger budgets for achieving a rating of “excellent” or “recommended” and are punished for rating “needs improvement.”

Meeting milestones : A convenience store manager earns a base salary plus small bonuses for each of ten different possible monthly milestones he meets. Typical managers can meet half of these milestones. Do they miss the others by a little or a lot?

Business loan : A colleague tells you that he can get a business loan from the bank, but the rates seem very high for what your colleague considers a low risk loan.

Monetary policy dependent on the elasticity of the is curve : How and why is the effectiveness of monetary policy dependent on the elasticity of the IS curve?

Soft drinks is price elastic and supply is price inelastic : Suppose that the demand for soft drinks is price elastic and the supply is price inelastic. If the government imposes a sales tax on soft drinks, which of the following will occur?

Firm uses labor and capital to produce a product : Assume that a firm uses labor and capital to produce a product. The firm hires labor at a wage rate of $4 per unit and rents capital at $5 per unit. At its current output level, the marginal physical products of labor and capital are 20 and 30 units,..

Game theory is particularly useful in describing outcomes : Game theory is particularly useful in describing outcomes in markets where a.) Firms are price takers b.) There is only one producer c.)There are many small producers d.) Earn the same profits e.) There are a few independent firms

About hiring plans-production plans-inventory levels : What business actions will be in the next few months, if consumer confidence is Less positive about business conditions But CEOs executive are optimist about the business? Think about hiring plans, production plans, inventory levels, and investment i..

Theories does not support deregulation : Which of the following theories does not support deregulation?

User Account

All Pages