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abruzzese [7]
3 years ago
8

Yachts are produced by a perfectly competitive industry in Dystopia. Industry output​ (Q) is currently​ 30,000 yachts per year.

The​ government, in an attempt to raise​ revenue, places a​ $20,000 tax on each yacht. Demand is​ highly, but not​ perfectly, elastic. Refer to Scenario 2. The result of the tax in the long run will be that
A. Q falls from​ 30,000; P rises by​ $20,000.
B. Q falls from​ 30,000; P rises by less than​ $20,000.
C. Q stays at​ 30,000; P rises by less than​ $20,000.
D. Q falls from​ 30,000; P does not change.
E. Q stays at​ 30,000; P rises by​ $20,000.
Business
1 answer:
Agata [3.3K]3 years ago
6 0

Answer:

The correct answer is option B.

Explanation:

A perfectly competitive industry is producing 30,000 yachts per year.

The government imposed a tax of $20,000 on each yacht.

The demand for yachts is highly elastic.

This imposition of tax will create a tax wedge in which the tax burden will be shared between buyers and sellers.

The price paid by the buyers will increase. While the price received by sellers will decrease.

This tax wedge causes the quantity demanded and quantity supplied to fall. As a result, the equilibrium quantity in the market declines.

Since the demand is highly elastic an increase in price will cause the quantity demanded to decrease by more than proportionate.

The price of the product will increase by less than $20,000 as the tax burden will be shared.

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E. the product is not compatible with existing habits

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However, experience indicates that this rarely happens. And when it happens, it is because there have been millionaire investments in media and product tests to try to convince a small part of the population to change their behavior.

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You are incentivizing a new product category, in which new players will want to participate, once you have made the investment to educate the market. So you must prepare to get the most out of your effort.

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The bank’s excess reserves are $6 million.

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The reserve ratio is the portion of reservable liabilities that business banks must keep onto, rather than lend out or invest. this is a requirement decided with the aid of the country's primary bank, which in America is the Federal Reserve. it is also known as the cash reserve ratio.

A reserve assets ratio for a bank which units the minimal liquid reserves that a bank ought to hold in the event of a sudden boom in withdrawals. A high reserve property ratio may limit the lending that a bank is able to do – it must maintain better amounts of cash.

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A British grocery chain uses previously obtained U.S. dollars to purchase apples from the United States. This transaction
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<h3>What is a grocery chain?</h3>

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In conclusion, Apples from the U.S. are purchased by a British supermarket chain using U.S. money that was previously purchased. This deal raises net capital outflow from the United Kingdom and boosts net exports from the United States.

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The rational-ignorance effect refers to the a. lack of incentive voters have to become well-informed about candidates and issues
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