Chapter 5: Problem 30
In a market where the supply curve is perfectly inelastic, how does an excise tax affect the price paid by consumers and the quantity bought and sold?
Chapter 5: Problem 30
In a market where the supply curve is perfectly inelastic, how does an excise tax affect the price paid by consumers and the quantity bought and sold?
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Get started for freeIf demand is inelastic, will shifts in supply have a larger effect on equilibrium price or on quantity?
Assume that the supply of low-skilled workers is fairly elastic, but the employers' demand for such workers is fairly inelastic. If the policy goal is to expand employment for low-skilled workers, is it better to focus on policy tools to shift the supply of unskilled labor or on tools to shift the demand for unskilled labor? What if the policy goal is to raise wages for this group? Explain your answers with supply and demand diagrams.
Describe the general appearance of a demand or a supply curve with infinite elasticity.
Suppose the cross-price elasticity of apples with respect to the price of oranges is \(0.4,\) and the price of oranges falls by 3\%. What will happen to the demand for apples?
If demand is elastic, will shifts in supply have a larger effect on equilibrium quantity or on price?
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