In the above figure, who pays the larger share of the tax?
A) buyers
B) sellers
C) Buyers and sellers each pay the same amount of the tax and each pays 10 per compact disc.
D) Buyers and sellers each pay the same amount of the tax, but the amount each pays is different than 10 per compact disc.
Question 2
The law of diminishing returns states that as
A) the size of a plant increases, the firm's fixed cost decreases.
B) the size of a plant increases, the firm's fixed cost increases.
C) a firm uses more of a variable input, given the quantity of fixed inputs, the marginal product of the variable input eventually diminishes.
D) a firm uses more of a variable input, given the quantity of fixed inputs, the firm's average total cost will decrease eventually.
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