Author Question: Suppose the demand curve for a product is horizontal and the supply curve is upward sloping. If a ... (Read 213 times)

anjilletteb · **on:** Jun 29, 2018

Suppose the demand curve for a product is horizontal and the supply curve is upward sloping. If a per-unit tax is imposed in the market for this product

A) buyers bear the entire burden of the tax.
B) the tax burden will be shared by buyers and sellers.
C) the tax burden will be shared among the government, buyers, and sellers.
D) sellers bear the entire burden of the tax.

Question 2

Suppose in Belgium, the opportunity cost of producing a trombone is 8 clarinets. In Denmark, the opportunity cost of producing a trombone is 6 clarinets.

a. What is the opportunity cost of producing a clarinet for Belgium?
b. What is the opportunity cost of producing a clarinet for Denmark?
c. Which country has a comparative advantage in the production of clarinets?
d. Which country has a comparative advantage in the production of trombones?

Missbam101 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

D

Answer to Question 2

a. For Belgium, the opportunity cost of producing a clarinet is 1/8 of a trombone.
b. For Denmark, the opportunity cost of producing a clarinet is 1/6 of a trombone.
c. Belgium has a comparative advantage in the production of clarinets.
d. Denmark has a comparative advantage in the production of trombones.