QUESTION 1 (4e)

1. Would you expect a tax on cigarettes to be more effective over the long run or the short run?
2. A.Long run because demand becomes more elastic over time
3. B.Long run because demand becomes less elastic over time
4. C.Short run because demand becomes more elastic over time
5. D.Short run because demand becomes less elastic over time

12 points

QUESTION 2

1. If supply is price-elastic and demand is price-inelastic, then a price decrease means a revenue increase for the firm.
2. A.True
3. B.False

12 points

QUESTION 3

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