If the government decreases the tax on cell phones, ________.
A) the deadweight loss decreases
B) the consumer surplus does not change because sellers will not lower the price of a cell phone
C) the number of cell phones purchased does not change
D) the market becomes less efficient because the government collects less tax revenue
Question 2
The income elasticity of demand for restaurant meals is 1.61. So
A) if income increases by 16.1 percent, the quantity demanded of restaurant meals will increase by 10 percent.
B) if income increases by 10 percent, the quantity demanded of restaurant meals will increase by 16.1 percent.
C) restaurant meals are an income elastic normal good.
D) Both answers B and C are correct.
