If demand is perfectly inelastic A) then a 1 increase in price ...

[mp14]

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.

[duke02]

Answer to Question 1

D

Answer to Question 2

A