When the government levies a seller tax on a good whose market demand is perfectly inelastic (and the market supply curve of this good is upward sloping as usual): Select one: O a. the entire tax burden falls on to the sellers of this good and there is no deadweight loss. 0 b. the entire tax burden falls on to the buyers of this good and there is no deadweight loss. O c. the entire tax burden falls on to the sellers of this good and there is deadweight loss. 0 d. the entire tax burden falls on to the buyers of this good and there is deadweight loss. es None of the above choices is correct, Clear my chOice Smith just bought a house for $250,000. Earthquake insurance, which would pay $250,000 in the event of a major earthquake, is available for $20,000. Smith estimates that the probability of a major earthquake in the coming year is 10 percent, and that in the event of such a quake, the property would be worth nothing. If Smith is riskneutral, would (s)he buy the insurance? Select one: 0 a. We need to know Smith's utility function. 0 b. Yes. O c. No. Q d. Smith is indifferent. In the consumer choice problem, if there are only two goods, Select one: 0 a. both goods must be normal. 0 b. the two goods must be substitutes. O c. the two goods must be complements. 0 d. None of the above choices is correct. Mandarins and bananas are substitutes in consumption (and unrelated in production). Suppose that mandarin producers are hit by bad weather, which increases their marginal cost of production (but banana producers live elsewhere and so their marginal cost stays the same). Assume a downward sloping demand curve and an upward sloping supply curve in both markets. Select one: Q a. Both the partial and general equilibrium analyses predict the price of mandarin to rise; and the rise in the price of mandarin is greater in the partial equilibrium analysis 0 b. Partial equilibrium analysis predicts the price of mandarin to rise, but the general equilibrium analysis predicts the opposite. O c. Partial equilibrium analysis predicts the price of mandarin to fall, but the general equilibrium analysis predicts the opposite. Q d. Both the partial and general equilibrium analyses predict the price of mandarin to rise; and the rise in the price of mandarin is greater in the general equilibrium analysis. O e. None of the above choices is correct. In the labour-leisure choice model we saw in class, the labour supply curve will be downward sloping Select one: Q a. when leisure is inferior. O b. when leisure is normal and the income effect exactly offsets the substitution effect. 0 c. when leisure is normal and the income effect partially offsets the substitution effect. 0 d. None of the above choices is correct. Your employer gives you a 5 percent salary rise this year, but the prices of all products are rising at 10 per cent per year. In comparison to your situation last year, Select one: O a. you are better off this year because your budget expands with a higher salary and relative prices are unchanged. 0 b, you are equally well off because your budget constraint remains the same. 0 c. you are worse of]c this year because your purchasing power falls. 0 d, None of the above choices is correct