If demand is perfectly inelastic
A) then a 1 increase in price leads to a fall in quantity of greater than 1.
B) then a 1 increase in price leads to a fall in quantity of less than 1.
C) then a 1 increase in prices then quantity demanded falls to zero.
D) then a 1 increase in price has no effect on quantity demanded.
Question 2
If the government wanted to efficiently limit the emission of carbon monoxide by all firms to exactly 4 million tons it could
A) issue rights to pollute worth 4 million tons and let the firms trade those rights in a market.
B) appeal to firms' environmental conscience to pollute less.
C) subsidize production.
D) rely on the Coase Theorem.
Testing Infant’s Understanding of Quantity
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