Amanda and Hector each produce homemade ketchu
What will be an ideal response?
a. The benevolent social planner would like to see Amanda make ketchup because the social cost to society per bottle is $1.25 + $2.50 = $3.75, which is less than the benefit received of $4.00. Hector should not make ketchup because the social cost ($1.80 + $2.50 = $4.30 ) is greater than the benefit received.
b. The ideal tax would be $2.50, which is the value of the external cost.
c. If the tax was set at twice the level of the ideal amount, which would be $5.00, both Amanda and Hector would be discouraged from making ketchup because the social cost for each of them would exceed the value of the benefit from each bottle, which is $4.00.
d. If the tax was set at half of the ideal amount, which would be $1.25, neither Amanda nor Hector would be discouraged from making ketchup because the social cost for each of them would be less than the $4.00 benefit.
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While corporations bear the statutory incidence of corporate income tax, the economic incidence is likely borne by:
A. shareholders. B. employees. C. customers. D. All of these likely bear some of the economic incidence.
In the standard Roy model, migration can lead to an increase in average skills in both locations. What is necessary for this to happen?
A. The workers who migrate from the source country are above-average in skill relative to the average source country person but are below-average in skill relative to the average destination country person. B. The highest skilled workers migrate from the source country to the destination country. C. The lowest skilled workers migrate from the source country to the destination country. D. Migration leads to an increase in average skills in both locations whenever there is positive selection. E. The workers who migrate from the source country are below-average in skill relative to the average source country person but are above-average in skill relative to the average destination country person.
When consumers are willing to buy more than producers are willing to sell:
A. there is excess supply of the product in the market. B. there is excess demand for the product in the market. C. the market is in equilibrium. D. the demand curve will shift until the quantity supplied equals the quantity demanded.
Which of the following countries had the smallest share of exports as a percentage of GDP in 2011?
A. Canada B. France C. United Kingdom D. United States