5. An often prevailing belief is that when producers experience an increase in cost, including an...

5. An often prevailing belief is that when producers experience an increase in cost, including an increase in taxes, they escape the increase by simply “passing it on” to consumers. When might this work? When might this not work? Explain. [Hint: Is there a relationship between elasticity of demand and tax incidence? You might look to the related pencast for help.]

6. With the passage of time, supply becomes progressively more and more elastic because with the passage of time consumers have the opportunity to cultivate more and more substitutes for a product. True or false? Explain.

7. What is consumer surplus? Do consumers always get to keep it? Might there ways for sellers to capture some of this consumer surplus for themselves?

8. If the coefficient of cross elasticity of demand is negative this means that the goods involved are substitutes. True or false? Explain.

Expert Solution

Rahul Sunny answered 1 year ago

Please answer all four questions, thanks!!! 5. An often prevailing belief is that when producers experience...

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