Consider a perfectly competitive constant cost industry. If the government provides a subsidy toproducers of t per unit, in the long run the incidence of the subsidy willa) be split between the consumer and the producers.b) fall exclusively on the producers.c) fall exclusively on the consumers.d) cannot be determined based on the information provided.

Consider perfectly competitive constant cost industry. If the government imposes a taxon consumers of $t per unit, in the long run the tax incidence willa) be split between the consumer and the producers.b) fall exclusively on the producers.c) fall exclusively on the consumers.d) cannot be determined based on the information provided.

Consider the perfectly competitive market for potatoes with demand given by P = 30–2Q and supply given by P = 10 + 2Q. The government is considering implementing a per unit subsidy $8 (paid to farmers). What is the incidence of this subsidy? Group of answer choicesThe incidence of this subsidy to buyers is $2 and to sellers is $6.The incidence of this subsidy to buyers is $3 and to sellers is $5.The incidence of this subsidy to buyers is $0 and to sellers is $8.The incidence of this subsidy is equally distributed between the buyers and the sellers.None of the other answers are correct

Consider a market in which the law of demand hold, but supply is perfectly inelastic. The government levies a tax on consumers of t per unit consumed. In this case Group of answer choicesConsumer and suppliers share the incidence of the tax; the DWL is increasing in the price elasticity of demand.Consumer and supplier share the incidence of the tax; there is no DWL.Suppliers pay for part of the tax; the DWL is increasing in the price elasticity of demand.Suppliers pay for all of the tax; the DWL is zero.None of the above.

The rational rule for a perfectly competitive market is to produce:Question 5Answera.at the output where the efficient quantity equals the benefit.b.less if the marginal benefit exceeds the marginal cost.c.the output level with minimum average cost and buy the quantity with the maximum benefit.d.more if the unit's marginal benefit exceeds its marginal cost.

Imagine two firms with identical cost structures that do not exhibit economies of scale at high levels of production. One is competing in a perfectly competitive market and one is a monopoly. In the long run which of the following is true?Group of answer choicesThe monopoly will charge a higher price than the perfectly competitive firmThe monopoly and the perfectly competitive firm will produce the same quantityThe monopoly and the perfectly competitive firm will charge the same priceThe monopoly will sell a higher quantity than the perfectly competitive firm