Compared to a valued added tax, a sales tax is _____.
a. easier to monitor
b. easier to apply to investment goods
c. harder to collect
d. all of the above
e. a and b
Question 2
The current price floor in the agricultural lettuce market makes it such that price of lettuce is 25 higher than equilibrium price and 100 heads of lettuce are demanded.
Assuming that the elasticity of demand for lettuce is -0.50, what would be the equilibrium price and quantity of lettuce if the government removed the current price floor?
A) Price = 0.875, Quantity = 125
B) Price = 1, Quantity = 112.5
C) Price = 0.75, Quantity = 112.5
D) Price = 0.75, Quantity = 125
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