Question

Fall 2019 Economics 2100 MY9 Section First Exam - Version A "I used to take the subway ten times a week and never took a cab. Now I have a high paying job so I go out more often than I used to. But I go in style. I take the subway five times a week and take a cab about fifteen times a week." It follows that for this person: cab rides and subway rides are both normal goods cab rides are normal goods and subway rides are inferior goods cab rides are inferior goods and subway rides are normal goods cab rides and subway rides are both inferior goods d) 10. Suppose that McDonald's knows that the demand for its burgers is elastic. Assume further that McDonald's lowers the price of its burgers. It follows that that the restaurant: will have an increase in revenue and its profits may also rise will have a reduction in revenue and its profits may fall will see no change in revenue and its profits will be constant will sell the same number of burgers as before You can unambiguously predict a reduction in the equilibrium quantity if: the demand and supply both increase the demand and supply both decrease the demand increases and supply decreases the demand decreases and supply increases Suppose that the Trump Administration imposes a 20% tariff (tax on imported goods) on Mexican tomatoes. The entire burden of the tax will fall on Americans if: the price elasticity of demand for tomatoes is perfectly inelastic the price elasticity of demand for tomatoes is perfectly elastic the price elasticity of demand for tomatoes is inelastic but not perfectly inelastic the price elasticity of demand for tomatoes is elastic but not perfectly elastic Suppose that the Trump Administration imposes a 20% tariff (tax on imported goods) on Mexican tomatoes. If the price elasticity of demand is unit elastic it follows that: the entire burden of the tax will fall on Mexican tomato growers the entire burden of the tax will fall on American consumers the burden of the tax will fall on Mexican tomato growers and American consumers there will be no burden caused by the tax

Answer 1

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