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Author Question: If the government institutes a specific tax for a good A) the producer simply passes the entire ... (Read 12 times)

leo leo

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on: Jul 1, 2018
If the government institutes a specific tax for a good
 
  A) the producer simply passes the entire tax on to the consumer.
  B) the producer must absorb the entire tax.
  C) the producer can generally only pass part of the tax onto the consumer.
  D) the equilibrium price drops.

Question 2

Suppose Cournot duopolist firms operate with each having a cost of 30qi (i = 1,2 ) so that each firm's marginal cost is 30. The inverse market demand curve is P = 120 - Q where Q = q1 + q2.
 
  Suppose there were no barriers to entry and firms continued to enter so long as there were positive economic profits. At the Nash-Cournot equilibrium, the price, P, is A) 30.
  B) 45.
  C) 60.
  D) 90.


Dunkey

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Reply #1 on: Jul 1, 2018
Answer to Question 1

C

Answer to Question 2

A


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