If the government places a 1.20 tax on each pizza sold
A) consumers will have to pay 1.20 more for each pizza they buy.
B) the supply curve will shift left by 1.20.
C) the demand curve will shift right by 1.20.
D) both the demand curve and the supply curve will shift by 60 cents each.
Question 2
If a firms cuts inputs in half, and output falls by more than half, then there are
A) increasing returns to scale.
B) decreasing returns to scale.
C) constant returns to scale.
D) decreasing marginal returns.
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