A tax placed on socks. Does the price recieved by producers rise of Fall? Can you tell whether total spending by consumers rises or falls? Explain.

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Jean KeelingLv2

8 Mar 2019

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The government places a tax on the purchase of socks. The following graph shows the market for socks before the tax. Assume that neither the demand curve nor the supply curve is perfectly elastic or perfectly inelastic. Use the green polygon (triangle symbol) to indicate the area that represents total spending by consumers before the government implements the tax. Then use the purple polygon (diamond symbol) to shade the area representing total revenue for producers in this case.

indigoalpaca102

Identify four shift factors of supply with the correct explanation of how each affects supply.

Instructions: To receive full credit, you must make a selection for each option. For the correct answer(s), click the box once to place a checkmark. For the incorrect answer(s), click twice to empty the box.

	Producers expect prices of their products to change in the future. As the price that producers expect to sell their products for increases, supply decreases.
	Income declines. As income rises, supply increases.
	Reduction in taxes paid by consumers. As taxes rise, supply falls.
	The price of inputs changes. As the price of inputs rises, supply decreases.
	When new production technologies have introduced the cost of production falls and supply increases.
	Change in taxes paid by producers. As the amount of taxes that producers pay increases, supply decreases.
	Change in consumer tastes. As the taste for a product rises, supply increases.

pearscorpion256

1. A price-discriminating monopoly

		sells a larger quantity than it would if it were a single-price monopoly.
		is illegal.
		cannot offer discounts.
		cannot control the price of its product.
		makes a smaller economic profit than it would if it were a single-price monopoly.

2. Assume someone organizes all farms in the nation into a single-price monopoly. As a result, the price consumers pay for food

		does not change, that is, it remains constant.
		falls.
		rises.
		might rise or fall depending on whether the demand for food is elastic or inelastic.
		might rise or fall depending on whether the monopoly's marginal revenue curve lies above or below its demand curve.