Author Question: Since demanders of a good are concerned with the total price they have to pay for a good, a unit tax ... (Read 40 times)

bclement10 · **on:** Jul 1, 2018

Since demanders of a good are concerned with the total price they have to pay for a good, a unit tax on the good will _____.

a. shift the supply curve downward by the entire amount of the tax
b. shift the supply curve upward by the entire amount of the tax
c. shift the demand curve downward by the entire amount of the tax
d. shift the demand curve upward by the entire amount of the tax

Question 2

Two-part tariffs allow the monopoly firm to capture all of the potential consumer surplus generated by the sale of its product.

Indicate whether the statement is true or false

rosiehomeworddo · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

c

Answer to Question 2

False. This is only the case if all consumers are identical. If consumers differ, no single tariff can capture all the consumer surplus.