In the country of Bora Bora, consumers buy large quantities of alcohol, tobacco, and coffee. Last ...

In the country of Bora Bora, consumers buy large quantities of alcohol, tobacco, and coffee. Last year, the prices of these goods each increased by 10 percent. The quantities demanded for these goods fell by 10, 3, and 8 percent, respectively. If the government is thinking about imposing a unit tax on one of these goods, which good should they choose to tax to raise the most tax revenue, and why?
 a. Alcohol; because the price elasticity is highest.
  b. Tobacco; because the price elasticity is lowest.
  c. Coffee; because it will have the lowest tax elasticity.
  d. Tobacco; because it will have the highest tax elasticity.
  e. Alcohol; because the burden of taxation would be more even.

QUESTION 2

Which of the following is a firm's supply curve in a perfectly competitive market?
 a. Total cost.
  b. Marginal revenue.
  c. Marginal cost.
  d. Average variable cost.

QUESTION 3

Good A has a price elasticity of demand of .27, while good B has a price elasticity of demand of 2.9 . To raise the most tax revenue, the government should:
 a. place a unit tax on good A.
  b. place a unit tax on good B.
  c. raise the price elasticity of demand for good A.
  d. subsidize the production of good B.
  e. cut its spending for various social programs.

QUESTION 4

A portrait photographer produces output in packages of 100 photos each. If the output sold increases from 600 to 700 photos, total revenue increases from 1,200 to 1,400 . The marginal revenue per photo is:
 a. 200.
  b. 100.
  c. 20.
  d. 2.
  e. 1.

QUESTION 5

To raise the most tax revenue, governments should consider taxing goods with:
 a. income elastic demands.
  b. price inelastic demands.
  c. income elastic demands.
  d. income inelastic demands.
  e. cross price elastic demands.