1) Consider an electric company that generates atmospheric pollution. Suppose the Government imposes a tax directly on the sellers of electricity. This will have the greatest effect on pollution if:
A) The supply function for electricity is relatively elastic
B) The demand function for elec. is relatively elastic
C) The demand function for elec. is relatively inelastic
D) The supply function for elec. is relatively inelastic
2) Consider the market education. Let the Government provide a subsidy to the students. This policy will have the greatest benefit if:
a) the demand function is more inelastic
b) the supply function is more inelastic
c) the demand function is more elastic
d) the supply function is more elastic