Author Question: The more inelastic the schedule, the greater the percentage of the tax that is borne on the other ... (Read 22 times)

bobthebuilder · **on:** Jul 1, 2018

The more inelastic the schedule, the greater the percentage of the tax that is borne on the other side of the market.

a. True b. False

Question 2

Under what conditions would firms be likely to support an industry-wide advertising ban?

What will be an ideal response?

apple · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

b

Answer to Question 2

If advertising only takes share away from rivals, the firms in the industry are better off if advertising is banned. Yet, if advertising is not banned, their dominant strategy is to advertise. This Nash equilibrium of all firms advertising, however, does not yield maximum joint profits.