Suppose the consumption equation is represented by the following: C = 250 + .8YD. The multiplier for the above economy equals
A) 2.
B) 3.
C) 4.
D) 5.
E) none of the above
D
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Refer to Excise Subsidy. Which areas count as part of the measure for both consumer's surplus and producer's surplus?
The following questions refer to the accompanying diagram which shows the effects of an excise subsidy given to firms. The initial price and quantity are P0 and Q0, respectively. After the subsidy is granted, the equilibrium quantity is Q1, firms receive the price Ps, and consumers pay the price Pd.
a. areas A, B, E and H.
b. areas B, E and F.
c. areas B and E.
d. no areas can count as part of the measure for both.
Diseconomies of scale are associated with
a. Inefficiencies b. Cost reduction c. Improvement in technology d. Division of labor
From Example 1.2 in the textbook, Pindyck and Rubinfeld distinguish between the mass market and dealer market for bicycles. Although there are many dealers in the U.S. and only a few mass merchandisers, we should expect the dealer market to be somewhat less competitive than the mass market. Why?
D B and C are correct. A Due to their differences in quality and performance, dealer bicycles are not close substitutes. (A) C Dealers are small sellers and have little control over bicycle prices. B The geographic extent of the market for dealer bicycles is typically small, so the individual sellers do not have many local competitors. (B) E A and B are correct.
If interest rates increase to a very high level, people will most likely hold
A. more money in savings accounts and more cash. B. less money in savings accounts and more cash. C. less money in savings accounts and less cash. D. more money in savings accounts and less cash.