Problem
1. Suppose that the supply curve for gold is very steep (positively sloped, but almost vertical).
• Would a $Ttax tend to have a relatively large or a relatively small effect upon the quantity exchanged in the market? Would there tend to be a relatively large or a relatively small effect upon the gross price paid by buyers? Upon the net price received by sellers?
• Explain in terms of the underlying economic meaning.
2. a. If the price of gasoline rises as a result of a reduction in petroleum supplies, what effect would you anticipate on the price of automobiles?
b. Upon the relative price of small, light cars versus large, heavy cars?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.